CIBIL reports Decrease in NPA figures

New NPA accounts getting added to the existing NPA figures has considerably decreased during the last one year, as reported by CIBIL.  The reasons attributed for the decrease are:

1. Early recognition of such NPAs by banks
2. Improvement in Corporate Health.

Effects:

• This is expected to bring down the stress in the entire banking system
• Out of Rs. 54.2 lakh crore of loans in the banking system, around 19% or Rs. 10.4 lakh crore has been declared as NPA as on March 2018.
• This means this figure has come down from 16% or by Rs. 8 lakh crore out of the total of Rs. 49.4 lakh crore in the month of March last year.
• CIBIL estimates that total unrecognized NPAs has come down from Rs. 5.5 lakh crore in March 2017 to Rs. 3.1 lakh Crore in March 2018 which indeed is a health reversal trend.

Remarks:

1. It may also be noted that CIBIL, in addition to the NPAs already declared by Banks, also monitors unrecognized NPAs, which are nothing but loans declared NPAs by a set of Banks, but still are accounted as Standard in another set of banks.
2. A slow movement in these loans towards recovery means, that the process of new NPAs being included is also slowing down which otherwise indeed is a healthy sign.