PSU Banks Credit Growth to take off

World Bank

Credit Delivery is likely to be brought into the system by PSU banks due to Recoveries and Capital Infusion.

  • Banks have successfully recovered about Rs. 3 lac crore of their sticky assets from promoters who have defaulted in the recent years.
  • The phone banking culture has been brought to an end by the Government and the system as claimed by the Government has been cleaned.
  • Thanks to the Recoveries and infusion of Fresh Capital to the tune of Rs. 2.6 lac crore has brought a stage for a possibility in the Credit Delivery by PSU Banks which is a good signal.
  • Some banks have also been brought out of the PCA (Prompt Corrective Action) framework, with the above mentioned Rs. 3 lac crore recoveries.
  • As on January 4, 2019 Annual bank loan has grown by 14.5% as per RBI data, which is attributed mainly to the growth in Retail Loans.
  • Earlier banks used to chase only small business men for repayment of loans, while the big businessmen had become a big headache for the banks.
  • But now, defaulting management are either paying their loans or quitting their business which is a good signal.
  • A Government notification adds that approach towards resolution and approach for bad loan recognition has also been streamlined.
  • During 2018 the Gross NPA of PSU Banks arising out of big loans of more than Rs. 5 crore rose by 23.1% from 18.1% in the previous year.
  • Either low capacity utilization or difficulty in completion projects, made many of the borrowers position precarious who could not pay back the dues.
  • An asset quality review and also inspection carried out in 2015 also revealed that many projects were concealed either due to restructuring or other reasons.

Note: The increased NPAs and continued losses had stalled credit growth in banks till the September quarter last year.

Author: Admin Bankedge

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