Public sector banks are likely to log higher bad loans by the end of this month compared with the same period last year, said finance minister P Chidambaram after reviewing their performance on Wednesday. He also blamed large corporates for this, saying bad loans are high on large corporate accounts. Ministry officials claim the top 30 such accounts are on the government radar.
State-run banks are likely to see more capital infusion as Chidambaram will meet the RBI governor on Friday.
Meanwhile, Chidambaram said during the April-December period, the banks recovered Rs18,933 crore. This is only about 20 per cent of the total non-performing assets (NPAs) in the banking system at about Rs1,92,000 crore.
“High bad loans are the biggest challenge for the banking sector. Bad loans are the highest among the large corporate accounts,” Chidambaram said.
A senior finance ministry official told dna: “The government is monitoring the top 30 accounts that have defaulted. Separate verticals are being set up to recover money from the accounts that have been written off.” State Bank of India is one of the banks that has set up such verticals.
The official said the government is not disclosing the names of the defaulters because of RBI guidelines. “The bulk of NPAs are from the accounts of borrowers who have taken more than Rs1 crore.”
The NPAs essentially are the bad debts in the banking system. The NPAs in the banking system have grown from Rs68,220 crore in 2008-09 to Rs1,94,000 crore in 2012-13. Of this, the share of the public sector banks alone is Rs1,62,000 crore.