INTRODUCTION

Non Performing Asset:

A non performing asset (NPA) refers to a classification for loans or advances that are in
default or are in arrears on scheduled payments of principal or interest. In most cases, debt
is classified as non performing when loan payments have not been made for a period of 90
days. While 90 days of non payment is the standard, the amount of elapsed time may be
shorter or longer depending on the terms and conditions of each loan.

Any asset which stops giving returns to its investors for a specified period of time is known
as Non-Performing Asset (NPA).

A bank’s business involves providing loans to the borrowers. The borrowers could be a
company, individual or any organization. The loans that are issued by the banks are known
as bank’s assets because the banks earn interest on the loans. But there is always a
possibility that borrowers may default on the payment of interest as well as the principal
amount. As per guidelines issued by the RBI, banks classify an account as NPA only if the
interest due and charged on that account is not serviced fully within 90 days from the day
it becomes payable. An asset becomes non-performing when it does not generate any
income for the bank. Now, there can be scenarios where the borrower does not pay the loan
amount even after the lapse of 90 days or more then these kinds then start coming under
NPA’s.

Formula:

Net non-performing assets = Gross NPAs – Provisions.

Gross NPA Ratio is the ratio of total gross NPA to total advances (loans) of the bank.

Net NPA to Advances (loans) Ratio is the ratio of Net NPA to advances. It is used as a
measure of the overall quality of the bank’s loan book.

Provision Coverage Ratio = Total provisions / Gross NPAs.

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What is Provision Coverage Ratio:

The key ratio in analyzing asset quality of the bank is between the total provision balances
of the bank as on a particular date to gross NPAs. It is a measure that indicates the extent
to which the bank has provided for the weaker part of its loan portfolio. A high ratio
suggests that further provisions to be made by the bank in the coming years would be
relatively low as the provision coverage is high(if gross non-performing assets do not rise
at a faster rate).

Gross NPA and Net NPA:

The NPA may be Gross NPA or Net NPA. In simple words, Gross NPA is the amount
which is outstanding in the books, regardless of any interest recorded and debited.
However, Net NPA is Gross NPA less interest debited to borrowal account and not
recovered or recognized as income. RBI has prescribed a formula for deciding the Gross
NPA and Net NPA.

Types of Non – Performing Assets:

1. Term Loans: A term loan i.e. plain vanilla debt facility will be treated as an NPA
when the principal or the interest installment of the loan has been due for more than
90 days.
2. Cash Credit and Overdraft - A cash credit or an overdraft when remaining past due
for more than 90 days it can be treated as an NPA.
3. Agricultural Advances - Agricultural advances that have been past due for more
than two crop seasons for short crop duration or one crop duration for long duration
crops.
There could be various other types of NPAs including residential mortgage, home
equity loans, credit card loans and non-credit card outstandings, direct and indirect
consumer loans.

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Classification of Assets:

Banks are required to make sub standardization of the non-performing assets (NPA) into
the following type of four broad groups:

1. Standard Assets - Standard assets are those assets which have remained non-
performing assets for a period of 12 months or less than 12 months and the risk of
the asset is normal
2. Sub – Standard Assets - For a period of more than 12 months, non-performing assets
are classified under sub-standard assets. Such kind of advances possess more than
normal risk and the creditworthiness of the borrower is quite weak.
3. Doubtful Debt - For a period which is exceeding 18 months, non-performing assets
come under the category of Doubtful Debts. Doubtful debts itself means that the
bank is highly doubtful of the recovery of its advances. The collection of such kind
of advances is highly questionable and there is the least probability that the loan
amount can be recovered from the party. Such kind of advances put the bank
liquidity and reputation at jeopardy
4. Loss Assets - The final classification of non-performing assets is loss assets were
the loan has been identified either by the bank itself or an external auditor or internal
auditor that the loan amount collection is not possible, and a bank has to take a dent
in its balance sheet. The Bank, in this case, has to write off the entire loan amount
outstanding or need to make a provision for full amount which needs to write off in
future.

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 MAIN REASONS FOR INCREASING NPA

The main Reasons for increasing Non Performing Assets of Banks:

The banking sector has been facing the severe problems of the rising NPAs. But the
problem of NPAs is more in public sector banks when compared to private sector banks
and foreign banks, the NPAs in PSB are increasing due to external as well as internal
factors.

External Factors:

1. Ineffective recovery tribunal:

The Government has set of numbers of recovery tribunals, which works for
recovery of loans and advances, due to their carelessness and ineffectiveness in their
work the bank suffers the consequence of non-recover, their by reducing their
profitability and liquidity.
2. Willful Defaults:
There are borrowers who are competent to pay back loans but are intentionally
withdrawing it. These groups of people should be recognized and proper measures
should be taken in order to get back the money extended to them as advances and
loans.
3. Natural Calamities:
This is the measure factor, which is creating alarming increase in NPAs of the PSBs.
every now and then India is hit by major natural calamities thus making the
borrowers unable to pay back there loans. Thus the bank has to make large amount
of provisions in order to pay damages those loans, hence end up the fiscal with a
reduced profit. Basically ours farmers depends on rain fall for cropping. Due to
irregularities of rain fall the farmers are not to attain the production level thus they
are not repaying the loans.
4. Industrial Sickness:
Inappropriate project handling , ineffective management , lack of adequate
resources , lack of advance technology , day to day changing government. Policies
produce industrial sickness. Therefore the banks that finance those industries

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 ultimately end up with a low recovery of their loans reducing their profit and
liquidity.
5. Lack of Demand:
Entrepreneurs in India could not predict their product demand and starts production
which ultimately piles up their product thus making them unable to pay back the
money they borrow to operate these activities. The banks recover the amount by
selling of their assets, which covers a smallest label. Therefore the banks record the
non recovered part as NPAs and has to make provision for it.
6. Change on Government:
With every new government banking sector gets new policies for its operation, so
it has to cope with the changing principles and policies for the regulation of the
rising of NPAs. For example, the fallout of handloom sector is continuing as most
of the weavers Co-operative societies have become defunct largely due to
withdrawal of state patronage. The rehabilitation plan worked out by the Central
government to renew the handloom sector has not yet been implemented, so the
over dues due to the handloom sectors are becoming NPAs.

Internal Factors:

1. Defective Lending Process:

There are three cardinal principles of bank lending that have been followed by the
commercial banks, that is, Principles of safety, Principle of liquidity, Principles of
profitability. Principles of safety mean that the borrower is in a position to pay back
the loan, including both principal and interest. The refund of loan depends upon the
borrowers, Capacity to pay and Willingness to pay.
Capacity to pay depends upon, Tangible assets, Success in business. Willingness to
pay depends on, Character, Honest, Reputation of borrower. The banker should,
therefore take utmost care in ensuring that the enterprise or business for which a
loan is sought is a sound one and the borrower is competent of carrying it out
successfully, he should be a person of integrity and good character.
2. Inappropriate Technology:
Due to improper technology and management information system, market driven
decisions on real time basis can not be taken. Proper MIS and financial accounting
system is not implemented in the banks, which leads to poor credit collection, so
NPA, therefore all the branches of the bank should be computerized.

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3. Improper SWOT Analysis:
The inappropriate strength, weakness, opportunity and threat analysis is another
reason for increase in NPAs. While providing unsecured advances the banks depend
more on the honesty, integrity, and financial soundness and credit worthiness of the
borrower, so, banks should consider the borrowers own capital investment and bank
should collect credit information of the borrowers from, a. Bankers b. Enquiry from
market/segment of trade, industry, business. c. From external credit rating agencies.
Banker should examine the balance sheet which shows the true picture of business
will be revealed on analysis of profit/loss a/c and balance sheet. When bankers give
loan, he should examine the purpose of the loan. To make sure safety and liquidity,
banks should grant loan for productive purpose only. Bank should examine the
profitability, viability, long term acceptability of the project while financing.
4. Poor Credit Appraisal System:
Deprived credit appraisal is an additional factor for the increase in NPAs, due to
poor credit appraisal the bank gives advances to those who are not able to repay it
back. They should use better credit appraisal to reduce the NPAs.
5. Managerial Deficiences:
The banker should always select the borrower very cautiously and should take
tangible assets as security to safe guard its interests. When accepting securities,
banks should consider, the Marketability, Acceptability, Safety, Transferability etc.
The banker should follow the principle of diversification of risk based on the
famous maxim “do not keep all the eggs in one basket”, which means that the banker
should not grant advances to a few big farms only or to concentrate them in few
industries or in a few cities. If a latest big customer meets misfortune or certain
traders or industries affected adversely, the overall position of the bank will not be
affected.
6. Absence of regular industrial visit:
The irregularities in spot visit also increases the NPAs, absence of regularly visit of
bank officials to the customer point decreases the collection of interest and
principals on the loan. So the NPAs can be collected by regular visits.
The growth and proliferation in the activities of the bank has led to ever-increasing
non-performing assets that have mounted to a huge amount during the last decade
or so. The quantum of NPAs has been calculated and put at different figures mainly
due to absence of correct statistics and the method on the basis adopted for

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 calculating the percentage of NPAs in relation to either the total assets of the bank
or the quantity of loan portfolio or on the basis of the number of the accounts or the
size of the outstanding advances.
For a large number of years, the banks have been taking credit in its books, on basis
of accrued interest income, even for the sum of periodic interest that was not really
paid by the borrower. This was done by raising debit in suspense account and
crediting amount equivalent to the periodic interest in the loan account of the
borrower.
In the anxiety to attain business targets the rules and procedures for prudent banking
were conveniently forgotten. Even the senior management setup conveniently
relaxed the rules for proper appraisal of the loan proposals, the provisions of
standard bank sanction letter, errors in execution of the loan agreements, deeds of
hypothecation and mortgages were more often overlooked for compliance in the
hurry for disbursement and attainment of targets for purposes of building up record
of achievements and reporting.

How does NPA affect the economy?

The higher is the amount of non-performing assets (NPAs), the weaker will be the bank’s
revenue stream.

In the short-term, many banks have the ability to handle an increase in nonperforming assets
— they might have strong reserves or other capital that can be used to offset the losses. But
after a while, if that capital is used up, nonperforming loans will endanger a bank’s health.
Think of nonperforming assets as dead weight on the balance sheet.

The impact of NPA on Indian Economy are as follows:

 As the NPA of the banks will rise, it will bring a scarcity of funds in the Indian
security markets. Few banks will be willing to lend if they are not sure of the
recovery of their money.
 The shareholders of the banks will lose a lot of money as banks themselves will find
it tough to survive in the market.
 This will lead to a crisis of confidence in the market. The price of loans, i.e. the
interest rates will shoot up badly. Shooting of interest rates will directly impact the

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 investors who wish to take loans for setting up infrastructural, industrial projects
etc.
 It will also impact the retail consumers like us, who will have to shell out a higher
interest rate for a loan.
 All of this will lead to a situation of low off take of funds from the security market.
This will hurt the overall demand in the Indian economy. And, finally it will lead to
lower growth rates and of course higher inflation because of the higher cost of
capital.
 This trend may continue in a vicious circle and deepen the crisis.
 Total NPAs have touched figures close to the size of UP budget. Imagine if all the
NPA was recovered, how well it can augur for the Indian economy.

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 THE ECONOMY SLOW DOWN

The Economy Slow Down: Where India Went Wrong

When the global recession started, economists were sure that India, and most other newly
industrialised countries (NICs), would escape lightly. They were soon proved wrong.
Indian exports have fallen for four straight months; industrial production for three. China
has fared even worse, and most unexpectedly of all, Japan has fared worst of all, with
exports falling by as much as 49% for two straight months.

India had been expected to suffer the least because its economy was the least dependent on
foreign trade. But this forecast did not take into account the very rapid pace at which our
economy had been integrated into the global economy in the past decade. The conventional
measure of integration - the trade to GDP ratio - told only a part of the story, although this
too had had recorded an impressive rise from 21.2% in 1997-98 to 34.7% in 2007-08. A far
better measure of integration was the ratio of total external transactions, i.e., trade and
capital flows, to GDP. This exceeded the entire GDP, having risen from 46.8% to 114.7%.

It was the impact of the recession on non-trade financial flows that was doing the most
harm to the economy. In the previous year capital inflows had broken all records and
reached a staggering 9% of the GDP. This had dwarfed the outflow on the current account
of 1.5% of the GDP and caused a sharp appreciation of the rupee. The reversal of these
flows after the global financial crisis are the cause of the deeper than expected recession
into which India is plunging, for it has compounded the impact of the decline in exports by
bringing down share prices and the value of the rupee very sharply. These have
strengthened the disinclination to invest and spend just when the economy needed the
opposite.

In September and October it brought down the cash reserve ratio and the repo and reverse
repo rates swiftly in order to reduce the cost of borrowing. Since then there have been two
fiscal stimulus packages, adding up to 3% of the GDP. This is over and above the loan
waiver to farmers and payments made to civil servants under the Sixth Pay Commission
award. All in all, the government has pumped in Rs 390,000 crore of additional liquidity
into the financial system. This amounts to a whopping 7% of the GDP.

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Indian banks are well capitalised and their resource base is sound. But the international
banks are not. Their managers, even in India, have therefore caught the flu and are
transmitting it to their Indian counterparts. As a result a bunker mentality has gripped the
financial sector: no one is bringing down interest rates and no one is lending. As a result in
the past five months bank lending has seldom exceeded a third of new deposits. And, apart
from token cuts by a few public sector banks , no one was lowering the interest rate.

The bank simply must bring down the cash reserve ratio to 4%, or even 3%, and the repo
rates to 2% and even 1%. These would be unthinkable in normal times. But the times are
not normal. A 5% CRR and a 4% and 3.5% repo and reverse repo rate may be appropriate
for ordinary times but it is an elaborate exercise in self-denial at a time when the global
financial market has failed and the world was sinking into a recession.

Raghuram Rajan: Former RBI Governor:

Former RBI Governor Raghuram Rajan told a parliamentary panel that a large number of
non-performing assets were given between 2006 and 2008, when the UPA was in power,
and that public sector banks for to blame for the bad loans problem.

The main points he highlighted were,

 There were large numbers of bad loans originated between 2006 and 2008
 Too many loans were given to promoters with history of defaulting
 Public sector banks failed to adequately monitor promoters

The parliamentary panel Rajan wrote to had sought his advice and "expert view" on the
NPA crisis. According to estimates, Indian banks were burdened with bad loans that
amount to more than Rs 10 lakh crore.

He also added how promoters got the loans from the bank. One promoter told him about
how he was pursued then by banks waving chequebooks, asking him to name the amount
he wanted.

The main reason for such huge number of bad loans were due o lack of monitoring done
by the bank before providing loans. He also added that too many loans were made [given]
to well-connected promoters who have a history of defaulting on their loans.

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Public sector bankers continued financing promoters even while private sector banks were
getting out. Rajan also blamed public sector banks for inadequate due diligence before and
after handing out loans.

Public sector bank monitoring of promoter and project health [for which loans were sought]
was inadequate. Banker performance after the initial loans were made was also not up to
the mark. Unscrupulous promoters who inflated the cost of capital equipment through over-
invoicing were rarely checked.

Another reason behind the Indian banks' bad loans problem, Rajan said, is that bankers fear
they will be "subject to harassment by the investigative agencies" if they label a transaction
as fraud.

Role of RBI in such situation:

Rajan also spoke about the Reserve Bank of India's role, admitting that the central bank
could have done more and that a "culture of leniency" present at the bank has started
changing. RBI could probably have raised more flags about the quality of lending in the
early days of banking exuberance. RBI could have started the asset quality review (AQR)
process earlier than it did and that it could have been "more decisive in enforcing penalties
on non-compliant banks".

Some Data of Bad Loans Increased after 2008-2009:

Public sector banks, which have over 70 per cent share in the business, saw a big increase
in bad loans. State Bank of India, the largest of the PSBs, saw the highest growth in its non-
performing assets (NPAs) amongst listed banking entities in 2009-10, as the economic
slowdown and payment defaults put a strain on the asset quality. For SBI, the country’s
largest lender, its gross NPAs rose by Rs 3,820 crore to Rs 19,534 crore by the end of
March. Bank of India's bad loans almost doubled to Rs 4,882 crore in the 12 months ending
March 31. 2010.

According to rating agency Icra’s estimates, outstanding gross NPAs of listed banks grew
by over Rs 14,500 crore in 2009-10 to cross Rs 76,000 crore. In per cent terms, gross NPAs
inched up to 2.3 per cent from 2.2 per cent at the end of March for the sector.

Private banks did better. Their outstanding bad loans either remained stable or saw only a
marginal increase. ICICI Bank and HDFC Bank showed a marginal drop in NPAs. In case

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of ICICI Bank, gross bad loans declined to Rs 9,480 crore at end-March, from Rs 9,649
crore a year before. For HDFC Bank, they were down to Rs 1,816 crore from Rs 1,988
crore.

Much of the addition was seen in the second and the third quarter of 2009-10. Gross bad
loans grew by Rs 5,000 crore in each quarter. The pace of addition slowed to just Rs 2,000
crore in the fourth quarter ended March, according to Karthik Srinivasan, co-head of
financial sector ratings for Icra.

Why did NPAs occurred?

1. Over – Optimism:
A larger number of bad loans were originated in the period 2006-2008 when
economic growth was strong, and previous infrastructure projects such as power
plants had been completed on time and within budget. It is at such times that banks
make mistakes. They extrapolate past growth and performance to the future. So they
are willing to accept higher leverage in projects, and less promoter equity. Indeed,
sometimes banks signed up to lend based on project reports by the promoter’s
investment bank, without doing their own due diligence. One promoter told
Rqghuram Rajan about how he was pursued then by banks waving checkbooks,
asking him to name the amount he wanted. This is the historic phenomenon of
irrational exuberance, common across countries at such a phase in the cycle.
2. Slow Growth:
Unfortunately, growth does not always take place as expected. The years of strong
global growth before the global financial crisis were followed by a slowdown,
which extended even to India, showing how much more integrated we had become
with the world. Strong demand projections for various projects were shown to be
increasingly unrealistic as domestic demand slowed down.
3. Governamnet Permission and Foot-Dragging:
A variety of governance problems such as the suspect allocation of coal mines
coupled with the fear of investigation slowed down government decision making in
Delhi, both in the UPA and the subsequent NDA governments. Project cost
overruns escalated for stalled projects and they became increasingly unable to
service debt. The continuing travails of the stranded power plants, even though

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 India is short of power, suggests government decision making has not picked up
sufficient pace to date.
4. Loss of Promoters and Banker Interest:
Once projects got delayed enough that the promoter had little equity left in the
project, he lost interest. Ideally, projects should be restructured at such times, with
banks writing down bank debt that is uncollectable, and promoters bringing in more
equity, under the threat that they would otherwise lose their project. Unfortunately,
until the Bankruptcy Code was enacted, bankers had little ability to threaten
promoters (see later), even incompetent or unscrupulous ones, with loss of their
project. Writing down the debt was then simply a gift to promoters, and no banker
wanted to take the risk of doing so and inviting the attention of the investigative
agencies. Stalled projects continued as “zombie” projects, neither dead nor alive
(“zombie” is a technical term used in the banking literature).
5. Malfeasance:
Undoubtedly, there was some, but it is hard to tell banker exuberance,
incompetence, and corruption apart. Clearly, bankers were overconfident and
probably did too little due diligence for some of these loans. Many did no
independent analysis, and placed excessive reliance on SBI Caps and IDBI to do
the necessary due diligence. Such outsourcing of analysis is a weakness in the
system, and multiplies the possibilities for undue influence.
Banker performance after the initial loans were made were also not up to the mark.
Unscrupulous promoters who inflated the cost of capital equipment through over-
invoicing were rarely checked. Public sector bankers continued financing promoters
even while private sector banks were getting out, suggesting their monitoring of
promoter and project health was inadequate. Too many bankers put yet more money
for additional “balancing” equipment, even though the initial project was heavily
underwater, and the promoter’s intent suspect. Finally, too many loans were made
to well-connected promoters who have a history of defaulting on their loans.
6. Fraud:
The size of frauds in the public sector banking system have been increasing, though
still small relative to the overall volume of NPAs. Frauds are different from normal
NPAs in that the loss is because of a patently illegal action, by either the borrower
or the banker. Unfortunately, the system has been singularly ineffective in bringing
even a single high profile fraudster to book. As a result, fraud is not discouraged.

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The investigative agencies blame the banks for labeling frauds much after the fraud has
actually taken place, the bankers are slow because they know that once they call a
transaction a fraud, they will be subject to harassment by the investigative agencies,
without substantial progress in catching the crooks. The RBI set up a fraud monitoring
cell when he was Governor to coordinate the early reporting of fraud cases to the
investigative agencies. He also sent a list of high profile cases to the PMO urging that
we coordinate action to bring at least one or two to book. He was not aware of progress
on this front. This is a matter that should be addressed with urgency.

Ways to Reduce NPAs:

It is high time financial institutions must take some serious steps to control the
unstoppable rise in the number of NPAs. Unless strict ways to reduce NPA are
introduced, they will keep piling up and will be an alarming economic concern.

1. SARFAESI ACT, 2002:

The SARFAESI ACT is the acronym of Securitisation And Reconstruction of Financial

Assets and Enforcement of Security Interest Act 2002. The Act has been amended by
Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act 2004.
The SARFAESI Act provides for Enforcement of Security Interest for the realization
of the dues without the intervention of Courts or Tribunals which is treated as one of
the most effective tools for recovery of NPAs under existing laws.

The SARFAESI empowers banks to deal with NPAs, without the involvement of court,
through three alternatives:

 Asset Reconstruction
 Enforcement of Security
 Securitisation

Any outstanding amount of more than ₹1 lakh can be dealt under SARFAESI. However,
an amount that is less than 20% or principal and the interest amount is not considered
under the Act. The Act also allows banks to:

 To release a notice to borrower (and their guarantor) asking them to release the
payment within 60 days from the receipt of notice.

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  To release notice to anyone who acquires the borrower’s secured assets to
produce the same to the bank.
 To advice any of the borrower’s debtors to pay off the loan due with the bank.

In case of failure from the borrower’s end with respect to the issue notice, the bank
may:

 Take possession of the secured assets of the borrower

 Sell or lease the security
 Manage the borrower’s security or appoint someone to manage the same.

Latest amendment to include NBFCs along with banks under SARFAESI act. : The
Finance Ministry, Government of India has in the exercise of its powers under
SARFAESI Act, 2002 (Further amended by SARFAESI Act, 2016) has notified on
August 5, 2016 that 196 NBFCs are included under the definition of Financial
Institutions as per the aforesaid Act. It was a major step in bringing out the NBFCs
at par with the banks, focusing the manner in which recovery actions were taken by
the NBFCs prior to this notification.In addition to 196 NBFCs covered under
SARFAESI act, NBFCs notified as Public Financial Institutions by the Central
Government, were also brought under the purview of the SARFAESI Act to
exercise their powers.

2. Debt Recovery Tribunals:

The DRTs function under the provisions of the Recovery of Debts Due to Banks and
Financial Institutions(RDDBFI) Act, 1993 and as per the Debts Recovery Tribunal
(Procedure) Rules, 1993. The Banks and financial institutions may approach the Debts
Recovery Tribunal (DRT) for recovery of the dues from any person provided the
amount of debt due to bank or financial institution or to a consortium of banks is more
than 20 lakhs rupees or such other amount, being not less than 1 lakh rupees, as the
Central Government may, by notification, specify.There is no upper monetary ceiling
for filing application with DRT for interim order. Whereas, under Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI)
Act, 2002 borrowers, guarantors, and any other person aggrieved by the actions of the
bank may also approach the Debts Recovery Tribunal (DRT) for redressal.

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3. Lok Adalats:

Small loans of ₹5 lakhs and less can be recovered through the Lok Adalats as per the
guidelines issued by RBI in year 2001. This alternative for dispute redressal mechanism
covers both suit and non-suit filed cases.

Method of organizing Lok Adalat:

The manager of the Bank shall contact the borrowers and negotiate with them the terms
of settlement. The Manager should convince the borrowers about the benefits of settling
the matter via Lok Adalat. The branch office has to take their higher office
permission/sanction wherever necessary, with regards to proposed terms of settlement.

The Legal Service Authorities shall be approached by the bank to conduct Lok Adalat
along with a list of the accounts where settlement is feasible. The Legal Service
Authority fixes the date of Lok Adalat and informs the same to the bank. The bank in
tern shall service notice to all the parties concerned. The concerned branch of the bank
should personally contact the borrowers and ensure that all parties be present at Lok
Adalat on the date fixed.

The Lok Adalat will be convened on the date fixed and same day award will be passed.
The award is final and binding on all the parties.

4. Compromise Settlement:

This scheme helps in recovery of NPAs up to ₹10 crores through a simplified non-
discretionary mechanism.

5. Credit Information Bureau:

Third party agencies such as CIBIL helps banks with data on the financial health of the
borrower. The Credit Information Bureau maintains records of individual defaulters
and shares it with the respective banks to aid them in making effective lending
decisions. For this, banks may be charged a fee.

6. Insolvency and Bankruptcy Code (IBC):

With the RBI’s push for the IBC, the resolution process is expected to quicken while
continuing to exercise control over the quality of the assets. There will be changes in

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the provision requirement, with the requirement for the higher proportion for provisions
going to make the books better.

The Code provides an order of priority while distributing assets/proceeds during

liquidation. The assets will be distributed in the following order (i) secured creditors
will receive their entire outstanding amount, rather than up to their collateral value, (ii)
unsecured creditors have priority over trade creditors, and (iii) government dues will be
repaid after unsecured creditors.In terms of RBI circular dated February 12, 2018, the
‘Resolution Plans’ (RP) under IBC shall be implemented within the timeline given
below in respect of large accounts where the exposures of lender at Rs.20 billion and
above.If the account is in default as on the reference date (on or after March 1, 2018),
then 180 days from the reference date or if the account is in default after the reference
date, then 180 days from the date of first such default.

If a RP is not implemented as per the above timeline, lender requires filing of

insolvency application under IBC, singly or jointly with other lenders within 15 days
from the expiry of above mentioned timeline.

7. Credit Risk Management:

This involves credit appraisal and monitoring accountability and credit by performing
various analysis on profit and loss accounts. While conducting these analyses, banks
should also do a sensitivity analysis and should build safeguards against external
factors.

8. Tightening Credit Monitoring:

A proper and effective Management Information System (MIS) needs to be

implemented to monitor warnings. The MIS should ideally detect issues and set off
timely alerts to management so that necessary actions can be taken.

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 CURRENT SCENARIO

India’s banking sector has been facing a large overhang of balance sheet stress. During
2017-18, the persisting deterioration in asset quality necessitated sharp increases in
provisions and for the first time since 1993-94, the banking system as a whole, particularly
driven by public sector banks (PSBs), registered losses. As regulator and supervisor, the
Reserve Bank’s approach to the revival of the banking system has been three-pronged: with
the asset quality reviews (AQRs) a fuller recognition of stressed assets is nearing
completion and provisioning is being policy-driven; in consonance, the implementation of
a new framework for resolution of stressed assets under the overarching mandate of the
Insolvency and Bankruptcy Code (IBC) is speeding up the de-stressing of balance sheets;
and the government has undertaken steps for recapitalisation of the PSBs in order to bolster
their financials. Reflecting these resolute efforts, asset quality of the banking sector has
improved marginally in 2018-19.

Figure no. 4.1 Aggregate of SCBs

Source: https://www.rbi.org.in/scripts/PublicationsView.aspx?Id=18743

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The size of the consolidated balance sheet of SCBs in India has been growing at a slowing
pace since 2012-13 and into 2017-18 as banks grappled with fuller recognition of stressed
assets. During 2018-19, however, growth returned to the balance sheet of SCBs, bolstered
by recovery in loan books.

During 2018-19, net interest income of SCBs picked up as interest income outpaced interest
expenses sizably as lending rates rose. However, non-interest income declined on a y-o-y
basis due to treasury losses. Operating expenses continued to grow by around 10 per cent
on average, leading to a marginal deceleration in operating profit growth. SCBs as a whole
continued to incur net losses during 2018-19, mainly due to higher provisioning by PSBs.

Figure no. 4.2 Provision Coverage Ratio

Source: https://www.rbi.org.in/scripts/PublicationsView.aspx?Id=18743#C5

Loan loss provisioning rose sharply in 2017-18 due to elevated levels of GNPAs and
time-bound referrals of large delinquent accounts to the National Company Law
Tribunals (NCLTs) under the IBC. The provision coverage ratio (PCR) accordingly
showed improvement across bank groups and crossed 52 per cent for all SCBs in 2018-
19. Nonetheless, the PCRs of PSBs were the lowest among the three bank groups

19
 Figure no. 4.3 Asset Quality of Banks

Source: https://www.rbi.org.in/scripts/PublicationsView.aspx?Id=18743#C5

During 2017-18, the GNPA ratio reached 14.6 per cent for PSBs due to restructured
advances slipping into NPAs and better NPA recognition. For PVBs, it remained at a much
lower level but rose during the year. The asset quality of FBs improved marginally.
Supervisory data suggest that during 2018- 19, the resolution of some large NPA accounts
resulted in an improvement in asset quality of SCBs.

Figure no. 4.4 Write – offs & Reduction in GNPA by SCBs

Source: https://www.rbi.org.in/scripts/PublicationsView.aspx?Id=18743#C5

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Resolute efforts on the part of PVBs to clean up their balance sheets through higher write-
offs and better recoveries also contributed to low GNPA ratios. Data from supervisory
returns suggest a decline in the ratio of write-offs to GNPAs during 2018- 19 across bank
groups and an improvement in actual recoveries.

Figur No. 4.5 Stress in Large Borrowal Accounts

Soure: https://www.rbi.org.in/scripts/PublicationsView.aspx?Id=18743#C5

During 2017-18, the GNPA ratio of PSBs arising from larger borrowal accounts (exposure
of ₹ 50 million or more) increased to 23.1 per cent from 18.1 per cent in the previous year.
Similarly, the GNPA ratio of PVBs arising from large borrowal accounts registered an
uptick, especially after the implementation of the revised framework of resolution of
stressed assets from February 12, 2018. However, the share of special mention accounts
(SMA–2), which have a high chance of degrading into NPAs, recorded a decline in case of
both bank groups. During 2018-19, NPAs in large borrowal accounts of PSBs and PVBs
declined; however, the proportion of SMA-2 loans in total loans recorded an uptick.

21
 Figure No. 4.6 Sectoral Shares in Loans & NPAs

Source: https://www.rbi.org.in/scripts/PublicationsView.aspx?Id=18743#C5

Sector-wise, industrial sector receives 37.3 per cent of total loans and advances, but it
contributes about three-fourth of total NPAs. Asset quality in the industrial sector
deteriorated during 2017-18, mainly with better recognition. The agricultural sector posted
an uptick in the GNPA ratio possibly reflecting debt waiver by several states. During 2018-
19, some moderation in industrial NPAs occurred due to resolution of certain large
accounts. At the same time, the asset quality of loans to the agricultural sector worsened
further. Loan defaults in retail loans remained at a low level (Chart IV.18a). Size-wise, one-
fourth of loans to large industries turned into NPAs by the end of March 2018. Medium
sized industries underwent improvement in loan quality during 2017-18, although in 2018-
19, these industries were faced with an uptick in the GNPA ratio i.e. Chart IV. 18b.

22
 Figure No. 4.7 Gross NPA Ration of Industries

Source: https://www.rbi.org.in/scripts/PublicationsView.aspx?Id=18743#C5

The gems and jewellery sector faced a significant increase in GNPAs during 2017-18 with
the unearthing of frauds. In contrast, the cement sector benefitted from a significant decline
in the GNPA ratio with resolution of some stressed accounts and an uptick in financial
performance. The basic metals and metal products sector remained highly leveraged,
although the proportion of bad loans declined in 2018-19 due to resolution of large NPA
accounts in the steel sector. Other industries with high levels of stress were engineering,
vehicles, construction and textiles. In all major industries, except for petroleum and coal
products, the GNPA ratio of PSBs remained higher than that of PVBs.

Figure No. 4.8 Stressed Asset

Source: https://www.rbi.org.in/scripts/PublicationsView.aspx?Id=18743#C5

23
Apart from recovery through various resolution mechanisms, banks are also cleaning up
balance sheets through sale of doubtful/ loss assets to assets reconstruction companies
(ARCs) and other banks/NBFCs/financial institutions by taking haircuts. During 2017-18,
the acquisition cost of ARCs as a proportion to the book value of assets increased,
indicating better realisations by banks on sale of stressed assets. Bank group-wise, PVBs
have been most aggressive on asset sales. PSBs lagged in asset sales mainly owing to large
haircuts and various management issues. On the positive side, some PSBs have
strengthened in-house expertise for recovery of NPAs, spurred by the need for faster
resolution. Quarterly data suggests that during 2018-19, sales of stressed assets to ARCs
by both PSBs and PVBs witnessed deceleration.

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The year wise data of NPAs of PSB from 2015 - 2016 to 2017 – 2018 from the Ministry of
Finance are as follows:

Sr. No. Bank FY- 2015- FY- 2016- FY - 2017-

16 17 18
1 Allahabad Bank 2126 2442 3635
2 Andhra Bank 814 1623 1666
3 Bank of Baroda 1554 4348 4948
4 Bank of India 2374 7346 8976
5 Bank of Maharashtra 903 1374 2460
6 Canara Bank 3387 5545 8310
7 Central Bank of India 1334 2396 2924
8 Corporation Bank 2495 3574 8228
9 Dena Bank 760 833 661
10 IDBI Bank Limited 5459 2868 12515
11 Indian Bank 926 437 1606
12 Indian Overseas Bank 2067 3066 6908
13 Oriental Bank of Commerce 1668 2308 6357
14 Punjab and Sind Bank 335 491 460
15 Punjab National Bank 6485 9205 7407
16 Syndicate Bank 1430 1271 2400
17 UCO Bank 1573 1937 2735
18 Union Bank of India 792 1264 3477
19 United Bank of India 649 714 1867
20 Vijaya Bank 510 1068 1539
21 State Bank of Bikaner and 643 1560 39151
Jaipur
22 State Bank of Hyderabad 1204 1430 39151
23 State Bank of India 15955 20339 39151
24 State Bank of Mysore 588 161 39151
25 State Bank of Patiala 1156 3528 39151
26 State Bank of Travancore 398 556 39151
Source: www.data.gov.in

25
Top 5 Sectors with Most Exposure of NPAs to the Banks:

Sectors like steel, textile, power, telecom and infrastructure accounts for most of banks
stressed assets. About 60% of banking systems stress belongs to these sector. By end of
FY17, banks had gross non-performing assets (NPAs) of 9.5% of gross advances valuing
up to Rs 7.65 lakh crore. GNPAs of a total 24 PSBs stood at Rs. 6.19 lakh crore, rising by
19.96% compared to Rs. 5.16 lakh crore in the similar period of the previous year.

1. Steel Exposure as a percentage of gross credit exposure was highest in public

sectors banks compared to private ones.
Figure no. 4.9 Iron & Steel Exposure

Source: https://cdn.zeebiz.com/sites/default/files/STEEL.png

Total exposure of steel industry is about Rs 3.13 lakh crore out of which gross NPAs is
about Rs 1.15 lakh crore – 36.94% of total loan outstanding as on March 2016.

2. Power sector exposure as a % gross credit exposure.

Figure No. 4.10 Power Exposure

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 Source: https://cdn.zeebiz.com/sites/default/files/POWER.png

Exposure of power sector as percentage of gross credit is highest in Canara Bank with
10.9%, followed by State Bank of India at 8.7%, Bank of India at 7.6% and Indian Bank
at 4.8%.Private lenders like ICICI Bank and Axis Bank has exposure of 4.7% and 3.9%,
respectively.

3. Telecom sector exposure as a % gross credit exposure

Figure No. 4.11 Telecom Exposure

Source: https://cdn.zeebiz.com/sites/default/files/telecom_1.png

Telecom sector has an outstanding debt of telecom sector is nearly Rs 4 lakh crore.

Debt of total listed telecom companies was at Rs 2,14,477 crore as on September 2016.
Looking at their low capacity for refinancing their debt, RBI has maintain a cautious
status on this segment for banks.

27
4. Textile sector exposure as a % gross credit exposure
Figure No. 4.12 Textile Exposure

Source: https://cdn.zeebiz.com/sites/default/files/TEXTILE.png

Textile exposure has been highest in Canara Bank, Bank of Baroda, Oriental Bank of
Commerce, Punjab National Bank and State Bank of India in the range of 5% - 2%.
Total advances of textile industries stood at Rs 214,574 crore and had gross NPAs of
Rs 37,383 crore as on June 2016, as per RBI.

5. Infrastructure sector exposure as a % gross credit exposure.

Figure no. 4.13 Infrastructure Exposure

Source: https://cdn.zeebiz.com/sites/default/files/INFRASTRUCTURE.png

Stressed assets in infrastructure reached already at 17.4% in the year FY13 and now
stands at 18.6% by September 2016.

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 IMPACT OF NPA

Unplanned expansion of corporate houses during boom period and loan taken at low
rates later being serviced at high rates, therefore, resulting into NPAs. The problem of
NPAs in the Indian banking system is one of the foremost and the most formidable
problems that had impact the entire banking system. Higher NPA ratio trembles the
confidence of investors, depositors, lenders etc. It also causes poor recycling of
funds,which in turn will have deleterious effect on the deployment of credit. The non-
recovery of loans effects not only further availability of credit but also financial
soundness of the banks.

Profitability:

NPAs put detrimental impact on the profitability as banks stop to earn income on one
hand and attract higher provisioning compared to standard assets on the other hand. On
an average, banks are providing around 25% to 30% additional provision on
incremental NPAs which has direct bearing on the profitability of the banks.

Asset (Credit) contraction:

The increased NPAs put pressure on recycling of funds and reduces the ability of banks
for lending more and thus results in lesser interest income. It contracts the money stock
which may lead to economic slowdown. Liability Management: In the light of high
NPAs, Banks tend to lower the interest rates on deposits on one hand and likely to levy
higher interest rates on advances to sustain. This may become hurdle in smooth
financial intermediation process and hampers banks’business as well as economic
growth.

Capital Adequacy:

As per Basel norms, banks are required to maintain adequate capital on risk-weighted
assets on an ongoing basis. Every increase in NPA level adds to risk weighted assets
which warrant the banks to shore up their capital base further. Capital has a price tag
ranging from 12% to 18% since it is a scarce resource.

29
Shareholders’ confidence:

Normally, shareholders are interested to enhance value of their investments through

higher dividends and market capitalization which is possible only when the bank posts
significant profits through improved business. The increased NPA level is likely to have
adverse impact on the bank business as well as profitability thereby the shareholders do
not receive a market return on their capital and sometimes it may erode their value of
investments. As per extant guidelines, banks whose Net NPA level is 5% & above are
required to take prior permission from RBI to declare dividend and also stipulate cap
on dividend payout.

Public confidence:

Credibility of banking system is also affected greatly due to higher level NPAs because
it shakes the confidence of general public in the soundness of the banking system. The
increased NPAs may pose liquidity issues which is likely to lead run on bank by
depositors. Thus, the increased incidence of NPAs not only affects the performance of
the banks but also affect the economy as a whole. In a nutshell, the high incidence of
NPA has cascading impact on all important financial ratios of the banks viz., Net
Interest Margin, Return on Assets, Profitability, Dividend Payout, Provision coverage
ratio, Credit contraction etc., which may likely to erode the value of all stakeholders
including Shareholders, Depositors, Borrowers, Employees and public at large.

Our banking system is robust and based on strong foundation. The Reserve Bank of
India as a central bank of India doing great job. In 2008 sub-prime crisis when banking
system in rest of the world is in danger of collapse, our domestic banking system was
secured. It was due to solid foundation of our banking system. But the situation has
changed a lot. As economy has slowed down due to global slowdown and structural
problem, it has indirect impact on credit disbursement. When mining sector was in
boom, a lot of iron industries were open up in India. So other ancillaries industries were
also mushroomed as a result. Banking sector has invested a lot in these industries, but
due to crash in global commodity market and subsequent slowdown in the economy
has affected the credit worthiness of the bank. There are other industries like aviation
sectors, infrastructure sectors , telecom sectors which has shown early promise but
slowdown in the market has negative impact on these sectors as a result banks cannot
recover their due and it became a NPA. Established and willful defaulters like Vijaya

30
Mallya have created tremendous loss to the banking sector. Another reason is debt
written off by successive state governments and central government on agricultural loan
and industrial loans. It has very bad effect on fiscal discipline of state finance and major
reason of increasing NPAs.

31
 SCAM

PUNJAB NATIONAL BANK – NIRAV MODI

The fraud, incidentally, is 49 times the net profit posted by PNB for quarter ending
December 31, 2017 and more than twice the amount that PNB got under bank
recapitalisation plan.

Billionaire jeweller Nirav Modi allegedly acquired fraudulent letters of undertaking

from one of its branches for overseas credit from other Indian lenders.

The Enforcement Directorate (ED) on Thursday conducted raids on jeweller Nirav

Modi's properties in Mumbai, Surat and Delhi. A case of money laundering has also
been lodged against Nirav Modi and others.

In a statement issued to exchanges, Punjab National Bank on Wednesday said it has

detected some fraudulent and unauthorised transactions (messages) in one of its branch
in Mumbai for the benefit of a few select account holders with their apparent
connivance.

Based on these transactions other banks appear to have advanced money to these
customers abroad. In the Bank these transactions are contingent in nature and liability
arising out of these on the Bank shall be decided based on the law and genuineness of
underlying transactions.

PNB has suspended 10 officers over the Rs 11,400 crore scam and referred the matter
to CBI for investigation. According to media reports, Nirav Modi left the country on
January 1 weeks before the CBI received complaint from PNB on January 29.

His brother Nishal, a Belgian citizen, also left the country on January 1, while wife
Ami, a US citizen, and business partner Mehul Choksi, the Indian promoter of Gitanjali
jewellery chain, departed on January 6.

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MODUS OPERANDI:

The Punjab National Bank in a letter on February 12 warned the other banks by
revealing the modus operandi used by bank officials of PNB's Brady House branch.

It was found through SWIFT trail that one 'junior level' branch official unauthorisedly
and fraudulently issued Letter of Undertakings (LoUs) on behalf of some companies
belonging to Nirav Modi Group viz. Solar Exports, Stellar Diamonds and Diamond R
US for availing buyers credit from overseas branches of Indian banks.

None of the transactions were routed through the CBS system, thus avoiding early
detection of fraudulent activity, it added. The bank also cautioned of a similar modus
operandi used by the same branch official in companies belonging to Gitanjali Gems
Ltd, promoted by Mehul Choksi viz. Gitanjali Gems, Gili India and Nakshatra while
issuing LOUs.

In case of LoUs, it has been found that at the time of issuing LoUs for a smaller amount
by SWIFT, the transaction was routed throuth the CBS system but subsequently,
amendments were made in these LoUs by substantially enhancing the amount of LoUs
and transmitted through SWIFT without routing these enhancements through CBS.

LOUs were opened in favour of overseas branches of Indian banks for import of pearls
for a period of one year, for which as per RBI guidelines, the total time period allowed
is 90 days from the date of shipment. Union Bank of India, Allahabad Bank and Axis
Bank are said to have offered credit based on letters of undertaking (LOUs) issued by
PNB.

Among those named is a deputy manager, Gokulnath Shetty, who was posted at PNBs
foreign exchange department in Mumbai since March 31, 2010. He had allegedly along
with another official Manoj Kharat fraudulently issued LoUs to these firms without
following prescribed procedure or making entries in the banking system, avoiding
detection of transactions.

The bank alleged two junior employees at the Mumbai branch had helped the
companies and people managing them get letters of credit or "letters of undertaking"
(LoUs) from it without having a sanctioned credit limit or maintaining funds "on
margin".

33
What is Letter of Undertaking (LoU)?

A. There is a widely accepted provision of bank guarantees known as a letter of

undertaking (LOU) under which a bank can allow its customer to raise money from
another Indian bank's foreign branch in the form of a short term credit. The LOU serves
the purpose of a bank guarantee for a bank's customer for making payment to its
offshore suppliers in the foreign currency.

B. For raising the LOU, the customer (importer) is supposed to pay margin money to
the bank that issues the LOU and accordingly, they are granted a credit limit. But in
Nirav Modi's case, neither was there a credit limit, nor did he ever give any margin
money.

C. Once the letter of credit is acknowledged and accepted, the lender (foreign branch
of Indian bank) transfers money to the nostro account of the bank that has issued the
LoU. In this case, Nostro account is the Punjab National Bank's account held in another
bank in a foreign country for the purpose of holding foreign currency.

D. As a matter of fact, letter of undertaking is a letter of credit issued by one bank (let's
call it Punjab National Bank) that paves way for another bank (let's call it Allahabad
Bank-AB) to give money to supplier of Punjab National Bank's customer. As
mentioned earlier, the money is transferred by AB to supplier of PNB's customer via a
nostro account that PNB holds in AB in abroad.

E. The credit is ideally meant for short-term only. In the Nirav Modi-Mehil Choksi
case, the term of loan was allegedly extended far beyond what is prescribed as per the
rule book. Even the PNB and other lenders are slugging out over the loan term, which
should not have been extended, says PNB, longer than 90 days.

Recent Situation:

As of 18 May 2018, the scam has ballooned ₹14,356.84 crore (US$2.1 billion) and
Nirav Modi is said to be hiding in London, allegedly travelling on a fake passport.

On 13 June 2018, the CBI approached the Interpol to issue a red corner notice (RCN)
against Nirav Modi's brother Nishal and one of his executives in connection with its
probe into the Punjab National Bank (PNB) fraud. The CBI sent a request to the Interpol
to issue a RCN against Nirav Modi and his uncle Mehul Choksi of the Gitanjali Group.

34
 Government Intitiatives to reduce the NPAs

Over the last four years, Government has taken comprehensive steps under its 4R’s
strategy of recognising NPAs transparently, resolving and recovering value from
stressed accounts, recapitalising PSBs, and reforms in banks and financial ecosystem
to ensure a responsible and clean system.

Steps taken to expedite and enable resolution of NPAs of PSBs, include, inter-alia, the
following:

 The Insolvency and Bankruptcy Code, 2016 (IBC) has been enacted, which has
provided for the taking over management of the affairs of the corporate debtor
at the outset of the corporate insolvency resolution process. Coupled with
debarment of wilful defaulters and persons associated with NPA accounts from
the resolution process, this has effected a fundamental change in the creditor-
debtor relationship. Further, the Banking Regulation Act, 1949 has been
amended to provide for authorisation to RBI to issue directions to banks to
initiate the insolvency resolution process under IBC. As per RBI’s directions
under the aforesaid amended provision in the Banking Regulation Act, 1949,
banks have been filed cases under IBC before the National Company Law
Tribunal in respect of RBI-specified borrowers.
 Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act has been amended to make it more effective, with
provision for three months’ imprisonment in case the borrower does not provide
asset details and for the lender to get possession of mortgaged property within
30 days. Also, six new Debts Recovery Tribunals have been established to
expedite recovery.
 Under the PSB Reforms Agenda, PSBs have created Stressed Asset
Management Verticals to focus attention on recovery, segregated monitoring
from sanctioning roles in high-value loans, and entrusted monitoring of loan
accounts of above Rs. 250 crore to specialised monitoring agencies for clean
and effective monitoring, and created online end-to-end One-Time Settlement
platforms for timely and better realisation.

35
Enabled by the above steps, as per RBI data on global operations (provisional data for
the financial year ending March 2019), gross NPAs of PSBs have declined from the
peak of Rs. 8,95,601 crore in March 2018 to Rs. 8,06,412 crore in March 2019
(provisional data). PSBs have recovered Rs. 3,59,496 crore over the last four financial
years, including record recovery of Rs. 1,23,156 crore during 2018-19.

 The Reserve Bank of India (RBI) had initiated an asset quality review (AQR)
in 2015 to clean up balance sheets of the bank. "As a result of AQR and
subsequent transparent recognition by banks, stressed accounts were
reclassified as NPAs and expected losses on stressed loans, not provided for
earlier under flexibility given to restructured loans, were provided for."
 As per RBI inputs, the primary reasons for the spurt in stressed assets have been
observed to be aggressive lending practices, wilful default, corruption in some
cases, and economic slowdown.
 Use of third-party data sources for comprehensive due diligence across data
sources has been instituted, thus mitigating risk on account of misrepresentation
and fraud.
 To ensure timely and better realisation in one-time settlements (OTSs), online
end-to-end OTS platforms have been set up.

36
 BIBLIOGRAPHY

https://en.wikipedia.org/wiki/Non-performing_loan

https://www.investopedia.com/terms/n/non-performing-assets.asp

https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx%3FId%3D449

https://www.quora.com/What-is-the-difference-between-a-bad-loan-and-an-NPA

https://economictimes.indiatimes.com/definition/non-performing-assets?from=mdr

https://www.sesameindia.com/blog/want-to-reduce-npas-here-are-the-things-to-know/

https://bankingschool.co.in/loans-and-advances/npa-management-loans-and-
advances/strategies-for-reducing-npa/

https://economictimes.indiatimes.com/industry/banking/finance/banking/provision-coverage-
ratio-of-psu-banks-on-the-rise-crosses-66/articleshow/67309291.cms?from=mdr

https://pib.gov.in/newsite/PrintRelease.aspx?relid=190704

https://thewire.in/banking/raghuram-rajan-npa-parliamentary-committee-modi-government

https://corporatefinanceinstitute.com/resources/knowledge/other/non-performing-assets-in-
indian-banks/

https://www.indiatoday.in/india/story/raghuram-rajan-bad-loans-npa-crisis-1337357-2018-09-
11

https://economictimes.indiatimes.com/news/economy/indicators/economic-slowdown-where-
india-went-wrong/articleshow/4342198.cms

https://www.rbi.org.in/scripts/PublicationsView.aspx?Id=18743

https://www.businesstoday.in/sectors/banks/nirav-modi-case-pnb-fraud-11400-crore-scam-ed-
cbi-raid/story/270708.html

https://www.ndtv.com/business/what-is-an-lou-letter-of-undertaking-five-things-to-know-
1814314

https://en.wikipedia.org/wiki/Punjab_National_Bank_Scam

https://www.businesstoday.in/sectors/banks/modi-government-4r-strategy-to-resolve-npa-
crisis-shows-results-bad-debt-reduces-rs-89189-cr/story/358884.html

https://pib.gov.in/newsite/PrintRelease.aspx?relid=190704

CITATION:
Pradhan, Raj. (2017). NEGATIVE IMPACT OF NPA ON INDIAN ECONOMY: AN
ANALYSIS.

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