Quick Answer: Why NPA Is So High In PSU Banks?

Which bank has highest NPA in 2020?

Among the major public sector banks, State Bank of India (SBI) had the highest amount of NPAs at over Rs 1.86 lakh crore followed by Punjab National Bank (Rs 57,630 crore), Bank of India (Rs 49,307 crore), Bank of Baroda (Rs 46,307 crore), Canara Bank (Rs 39,164 crore) and Union Bank of India (Rs 38,286 crore)..

What are the reasons of NPA?

The factors that are contributing to NPA are poor loan management policy, improper credit appraisal, business failures, poor recovery of receivables, sluggish legal system, industrial recession, and adverse exchange rates etc.

Why private banks have less NPA?

If banks are not able to lend larger portion of the deposits they have collected as loans their future profitability will also be adversely affected. Though all banks have seen a rise in NPAs over the past 5 years, private banks’ bad loans are lower compared than that of public sector banks (PSB).

Why NPA is bad for bank?

The figure roughly translates to near 10% of all loans given. This means that about 10% of loans are never paid back, resulting in substantial loss of money to the banks. When restructured and unrecognised assets are added the total stress would be 15-20% of total loans. NPA crisis in India is set to worsen.

How do banks reduce NPA?

Ways to Reduce NPAsTo release a notice to borrower (and their guarantor) asking them to release the payment within 60 days from the receipt of notice.To release notice to anyone who acquires the borrower’s secured assets to produce the same to the bank.More items…•

Which sector has highest NPA?

Among these five categories, the highest non-performing assets (NPAs) or bad loans in the ‘industrial’ sector stood at Rs 3,33,143 crore, followed by ‘other categories’ loan at Rs 1,77,275 crore, ‘agriculture and allied activities’ Rs 1,11,328 crore, ‘housing loan’ Rs 17,045 crore and ‘education loan’ at Rs 5,626 crore …

How can we solve the NPA crisis?

One immediate action that is required is resolving the NPAs.Banks have to accept losses on loans (or ‘haircuts’).They should be able to do so without any fear of harassment by the investigative agencies.The Indian Banks’ Association has set up a six-member panel to oversee resolution plans of lead lenders.More items…•

Why is private bank better than government?

Private Banks have continued to perform better than Public banks showing effective management in containing quality and prudent lending policies. The net interest margin-difference between yield on advances and cost of deposits reduced more for PSBs as compared to the private banks.

Which bank is in loss in India?

Central Bank of India had reported a net loss of Rs 5,641.48 crore in 2018-19 earlier. “The adjusted (notional) net profit after tax for the year ended March 31, 2019 after taking into account the divergence in provisioning is (-) Rs 6,430.48 crore,” the bank said in a regulatory filing.

What is the NPA of HDFC Bank?

HDFC Bank’s NPAs value FY 2017-2020 In fiscal year 2020, the value of gross NPAs at HDFC Bank Limited across India amounted to 126 billion Indian rupees. This was a big increase in the NPAs filed by the bank compared to the fiscal year 2017 when it amounted to about 58 billion rupees.

Who is responsible for NPA?

According to estimates, Indian banks are currently burdened with bad loans that amount to more than Rs 10 lakh crore. Rajan, who completed his term as RBI governor in September 2016, laid the blame for this mega NPA crisis on banks, labelling the handing out of loans as a “historic phenomenon of irrational exuberance”.

How serious is India’s NPA issue?

According to the FSR The gross non-performing assets would go up from 11.3% in March 2020 to 15.2% in March 2021, and to 16.3% under a very severe stress scenario. The CRAR is estimated to deteriorate from 14.6% in March to 13.3% in the baseline scenario, and to 11.8% under a very severe stress scenario.

Who is the No 1 bank in India?

HDFC BankHDFC Bank ranked No. 1 in India by Forbes; Surprise at No. 3; SBI not in top 10.

Which bank has lowest NPA in India?

Private-sector banks in India have higher capital buffer compared to state-owned peersBandhan Bank. 23.2%Kotak Bank. 22.4.HDFC Bank. 16.7.City Union. 15.7.DCB. 13.9.ICICI Bank. 13.6.Axis Bank. 13.5.IndusInd Bank. 13.2.More items…•

How can we solve the problem of NPA?

Measures to reduce NPA :-Through ‘Insolvency and Bankruptcy Code (IBC)’, 2016 banks are either reviving the companies or liquidating them to solve NPAs issue.The immediate solution is to sell Non performing assets. … Among all defaulters, the top 20 companies created nearly Rs.More items…•