NPA PROBLEM IN

INDIA

CAUSES, CONSEQUENCES AND

FY2018
WAY FORWARD

Group 6
Shivaen Katial 32

Saaraj Sharma 33

Rajat Kumar Jain 34

Akshita Chaudhry 35

Yojit Rajput 37

Shivam Joshi 62
 NPA PROBLEM IN INDIA

CONTENTS
PREFACE .............................................................................................................................. 2
ACKNOWLEDGEMENT ......................................................................................................... 3
INTRODUCTION................................................................................................................... 4
2. OBJECTIVE ....................................................................................................................... 5
3. METHODOLOGY .............................................................................................................. 5
4. WHY DO LOANS GO BAD ............................................................................................... 6
5. WHY NPA EXPERIENCED A SUDDEN PHASE OF RISE IN INDIA ...................................... 8
6. WHAT HAS CONTRIBUTED TO SOME OF THE BIGGEST NPA SCAMS IN INDIA ............ 12
7. INDIA’S NPA AND THE GLOBAL SCENARIO ................................................................. 14
8. ROAD AHEAD TO TACKLE NPAS .................................................................................. 15
9. CONCLUSION ................................................................................................................ 17

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PREFACE
This project was undertaken to understand and address the problem of growing NPAs in the Indian Banking
Sector. Banking sector drives the growth of any economy with the help of money multiplier. But, in this process
they are also exposed to multiple risks or credit, liquidity, interest, market, operations, and management. The
sound financial position of a bank depends on the recovery of loans. A NPA ceases to generate income and
creases the need for more provisions, therefore reducing the overall profitability of banks and causing
problems of liquidity. It also affects the bank’s net worth, erodes value of assets, and poses threat to quality
of assets and survival of banks. As for the economy, increasing level of NPAs also reflect on the health of
trade and industry. To improve the efficiency and profitability of the banks, these need to be seriously
evaluated and monitored.

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ACKNOWLEDGEMENT
We would like to express our sincere gratitude to Lal Bahadur Shastri Institute of Management for providing

us a platform to enhance our knowledge and skills. We are extremely thankful and pay our gratitude to our

faculty Dr. RASHMI AHUJA for her valuable advice throughout the process. We would like to state that any

omission in this brief acknowledgement does not mean lack of gratitude.

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INTRODUCTION
1.1 The Indian Banking System
It comprises of Commercial and Cooperative Banks, where former hold more than 90% of the banking assets.

Besides a few foreign and Indian private banks, there are Nationalized banks- where majority holding is with
the government, SBI- who’s majority shareholding is with RBI, SBI’s Associates- with majority shareholding of
SBI, and Regional Rural Banks.

Until 1991, the asset quality of these banks was not a major concern. Performance objectives such as opening
wide networks, development of rural areas, priority lending and increasing employment generation were
valued more. Bankers, now have to realize their role as the custodian and distributors of liquid capital of the
country; responsible for mobilizing savings by accepting deposits. Deposit mobilization by banks leads to
economic prosperity by control of money circulation and channelizing funds for development and productive
purposes.

Sources of these funds for banks are- depoits, capital, reserves, and borrowings, Assets in the books of banks
are shown as Cash, balances with other banks, investments, loan and advances, fixed assets and other assets.

NPAs are restricted to loans, advances and investments.

1.2 NPA
According to RBI Master Circular- Prudential Norms on Income recognition, Asset Classification and
Provisioning, non-performing asset (NPA) was defined as a credit facility in respect of which the interest and/
or instalment of principal has remained ‘past due’ for a specified period of time. The specified period was
reduced in a phased manner as under:

As long as an asset generates the income expected from it and does not disclose any risk other than normal
commercial risk, it is treated as performing; when it fails to generate expected income it becomes past due

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when unpaid for 30 or more days, and A loan becomes NPA when it ceases to generate income, interest, fees,
commission or any other dues for the bank for more than 90 days.

Based upon the period to which a loan has remained as NPA, it is classified into 3 types:

2. OBJECTIVE
The objectives of this study are to understand the concept of non-performing assets, to understand the NPAs
sector wise, to understand the recovery through various channels, to know the impact of NPAs on Indian
Banking Sector, and making a cross-country comparison.

3. METHODOLOGY
This study is based on secondary sources of quantitative and qualitative data for the period 2014-2018. The
sources include, RBI’s published reports, magazines, journals and news articles. The data from these sources
has been used to find out the ratios needed for analysis, and to identify the factors influencing the figures.

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4. WHY DO LOANS GO BAD

4.1 BANKERS’ SIDE

1. Defective Sanction :

Strong economic growth in 2007 led banks and investors to lend a lot more due to high hopes that the boom
will continue. In the words of past RBI Governor Mr. Raghuram Rajan, “This is the historic phenomenon of
irrational exuberance, common across countries at such a phase in the cycle.” Banks had lent heavily to the
steel and Manufacturing industry. Lack of sufficient background checks, along with banks accepting higher
leverages and less promoter equity meant trouble was mounting. Thus, when the crisis of 2008 began, things
started getting bad. Projects came to a hault, and revival proved inefficient, adding even more to the costs
instead and recovery of loans became tough.

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When we look at the above two line charts of GDP and Domestic credit, we can see as the real GDP growth
rate rises, the rate of credit growth also increases in the same way. Basically, GDP and credit growth rate are
directly proportional to each other. It can be explained in a flow of events which lead to this:

From the above graph, we can see that with the advent of the new government coming and favorable crude
oil prices, the optimism for the market increased. As GDP rate also started growing combined with increased
market optimism, corporates started to borrow more money to invest in different projects. There was rampant
lending in the market by NBFC’s as well as PSB’s. But markets corrections started taking place and with note
ban and GST reform in a short interval the growth rate slowed down which affected the credit growth rate as
well. High growth phases are also when Substandard Assets are generated within the banking sector. This is
due to creation of excess capacity, availability of easy credit, less strict underwriting and easier monitoring
during such a phase.

2.Weak Post Sanction Supervision:

Post sanction supervision was weak, especially in case of Public Sector Banks. Weak post lending supervision
also contributed to Loans becoming NPAs. Short tenure of Public Sector Bank chiefs acted as a distorted
incentive, as it is easier to push the burden of reforms on the shoulders of the successor. For example, Nirav
Modi Scam.

3.Corruption and Undue Influence

Although prevalent only in certain cases, another strong reasons for loans becoming NPAs was Corruption.
Companies took loans for paying to shell companies set up abroad and showing imports, Or by diverting
funds out of the company by showing inflated value of imports. For example, nepotism scandal of ICICI bank
under CEO Chanda Kochhar.

4.2 BORROWERS’ SIDE

1.Lack of planning on the borrowers side: Some of the most important examples are in the case of the Student
debt crisis in USA Student debt has more than tripled since 2004, reaching $1.52 trillion in the first quarter of
2018

2.Unforeseen circumstances. Credit card debts due to unforeseen circumstances such as medical emergencies,
natural calamities etc. 60% of Indians have less than 5000 rupees in their savings account. (Most of the
people do not have an emergency fund and Rational decisions are not made during times of emergencies).

3.Economy slows down which leads to a fall in demand. For example, State Bank of India (SBI) said Bhushan
Steel had failed to repay loans worth thousands of crores. The company’s total debts stand at Rs. 46,062
crore; about the same as India’s budgetary outlay on school education in 2017. Bhushan Steel became part of
the “NPA crisis”, shorthand for Rs 8-lakh crore worth of loan defaults or Non-Performing Assets. Company
promoters blame these defaults on a global recession, poor regulation and sheer bad luck.

4.Industrial Sickness. Improper project handling, ineffective management, lack of adequate resources, lack of
advance technology and the day to day changing of government policies give birth to industrial sickness.

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Hence the banks that finance those industries ultimately end up with a low recovery because the constituent
company’s loans turn into NPA’s.

5.Willful defaulter, Diversion of funds, fraud etc.

5. WHY NPA EXPERIENCED A SUDDEN PHASE OF RISE IN INDIA

India secures the 5th rank amongst the countries with the highest NPAs. Preceded by only Greece, Italy,
Portugal and Ireland who’ve all recently faced debt crisis. RBI's data reflects that while Gross NPA rates have
gone up from 3.9% in FY 14 to 12.3% in FY 18, credit growth has slowed significantly from 13.9% in FY 14
to 8.2% in FY 17 before recovering slightly to 10% in FY 18. All this while, the Return on Assets for the banks
have fallen from 0.7% to -0.3%.

India has seen a significant rise in NPA as talked above but this factors are not the only reason. The major
reason is the method by which an asset is classified as an Non Performing Asset.

RBI Circular:
In the year 2013, the RBI revised its guidelines on bad asset classification. the RBI came up with new
guidelines on restructured advances and NPAs. As per the new norms, standard account on restructuring will
be immediately classified as NPA on restructuring from April 2015 with certain exceptions. On the stringent
conditions imposed for restructuring by the RBI, the restructuring would be more difficult, prompting unviable
exposures to slip into NPA category. As we can see in the above charts, the GNPA’s increased suddenly in the
second quarter of 2015. It increased the NPA to around 6%Talking in terms of the amount involved it
increased from around 2 lakh crore in 2014 to 6 lakh crore in 2016. The RBI also released a recent circular
where borrowers were forced to implement a plan for resolving loans within 180 days of default or go to
insolvency court.

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Banks Hiding Bad Loans:

Bankers, in their greed to not let bad news come out that could affect their stock prices negatively hid bad loans. The
quantum of these Bad loans stood at $3.6 billion as on February 2018! The credit goes to the RBI auditing who were
able to find discrepencies. This saw SBI reporting its first quarterly losses seen in the graph above. This underreporting
has led to a big economic stress Some banks have also been fined heavily for underreporting bad loans. Yes Bank
was fined Rs 6 crore, Axis Bank and IndusInd were fined Rs 3 crore, and IDBI Bank was fined Rs 2 crore. Therefore,
starting 2015 banks started listing the NPAs they earlier concealed by ‘evergreening’.

Technically, evergreening refers to the practice of "managing" the balance sheet through means, which may
not be violating banking laws in letter, but breaching them in spirit.
For instance, a bank can lend money to a company to pay off another bank's loan. This way, the second bank
can save an account from going bad and reduce its non-performing assets (NPAs). The second bank can then
extend a similar facility to a company which has not been been able to repay loans from the first bank.

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Capital to risk-weighted assets ratio(CRAR)

Capital Adequacy Ratio (CAR) is also known as Capital to Risk (Weighted) Assets Ratio (CRAR),[1] is
the ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a
reasonable amount of loss and complies with statutory Capital requirements. It is a measure of a bank's
capital. It is expressed as a percentage of a bank's risk weighted credit exposures. The enforcement of
regulated levels of this ratio is intended to protect depositors and promote stability and efficiency of financial
systems around the world. Banks are required to maintain a minimum CRAR of 9 per cent on an ongoing
basis but from the graph above we can see that the CRAR is way above in the commercial banks from the
year 2016.It gives us an analysis that Indian banks have although have maintained it but it the amount od
bad loans it has, the CRAR may not be sufficient enough. But it also has a positive side to it, this is the reason
that the banks have not reached the stage of bankruptcy or insolvency.

Demonetization and GST :

Demonetization and GST are also seen as reasons for mounting NPA. It is argued that withdrawal of nearly 15 trillion
in currency lead to a monetary shock, leading to the banking crisis. Also, MSME are said to be disturbed by GST
affecting their financial health in the process. But even before GST and demonetization, GNPA stood at 9.4% in
2016. Therefore, though these are some of the factors contributing to mounting NPA levels, they are not the sole
reasons.

For banks, Lending includes Corporate lending, small business lending and consumer lending. Out of about a
$1.2 trillion in loan assets (banking-system wide), consumer credit accounts for about $345 billion, small
business credit for about $70 billion and corporate credit for majority of the remaining.
Corporate loans in general are experiencing more stress. RBI data shows that sectors such as metals (46.3%
NPAs) & engineering (34.4% NPAs) are in much worse condition the discrepancies an others such as chemicals
(8.8% NPAs). However, what is crucial is that retail lending- the segment considered the securest is showing
signs of stress. A CRIF study shows that approximately 10.04% of all unsecured retail loans are under stress.
Small business loans (MSME) are also under stress.

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INDUSTRIAL CONTIBUTION TO NPA

50.00%
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
METALS ENGINEERING CHEMICALS RETAIL

Another reason is that some sectors of the SCBs have been eating up others. The Asset quality of PSUs is far
worse than the private banks. While the industry average is 12.3% GNPA rate, PSUs have GNPA rate of
15.6%, while private have GNPA rate of 4%.

25%

20%

15%

10%

5%

0%
Pvt Banks Foreign Banks PSU Banks

GNPA Credit Growth CRAR

Even amongst private banks HDFC has an GNPA of about 1.3%, while ICICI has 8.84% and Axis banks has
6.77%

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6. WHAT HAS CONTRIBUTED TO SOME OF THE BIGGEST NPA SCAMS IN

INDIA
N I R AV M O D I S C A M

Nirav Modi, the billionaire jeweller, with his relatives scammed Punjab National Bank (PNB) of over Rs 11,400
crores. This became one of the biggest frauds in India's banking history. CBI registered a case against Nirav
Modi in January 2018. PNB reported a scam of Rs. 11400 Crores.

Nirav Modi as an importer of diamonds would have preferred loans in a foreign currency from overseas
banks as the interest rates on them are lower. PNB had therefore as the home bank, issued Letter of
Undertaking to overseas banks, guaranteeing that the money would be returned to the bank. A Nostro
account was thus created to which loan was granted.

SO HOW IT PNB ISSUE SO MANY LOUs?

It could be that new LOU was issued each year to cover old ones, or that the existing LOUs were continually
extended.

LOUs are generally given when home bank has approved line of credit for client. PNB should have verified
Modi’s credit worthiness and should have asked Modi to present collateral equal to or greater than loan
requested, but PNB did neither.

HOW DID ALL THIS GO UNNOTICED?

The LOUs are delivered through SWIFT- coded messages used in international banking transactions. All
banking records are stored on Core Banking system. CBS ans SWIFT are recorded on one interface. PNB did
not have this system, neither were the transactions in sync or manually recorded.

SWIFT accounts go through 3 tier verification system: Create, Check and Authorize transaction. So bank
employees at different levels are complacent to the fraud.

WHO ELSE IS RESPONSIBLE?

1- PNB’s auditors for negligence
2- Overseas banks such as Allahabad bank, Union Bank of India and Axis Bank for overlooking Nostro
Accounts.
3- RBI for negligence.
4- Finance Ministry, because the government is the biggest shareholder in PSBs.

As a result PNB will try to recover some of the amount from PNBs assets, and rest from banks own money
which will erode its capital base, further government might infuse some money using taxpayers’ money.

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C H A N DA KO C H H A R S C A M

2008:
Entrepreneur Deepak Kochhar, along with Videocon group chairman Venugopal Dhoot, sets up NuPower
Renewables. The firm was established as an independent power producer(IPP) in the renewable energy
sector.

2009:
Kochhar succeeded KV Kamath to take over as the ICICI Bank’s chief in May.

2012:
A consortium of 20 banks and financial institutions lended Rs. 40,000 crore to the Videocon group and 12 of
its subsidiaries. Out of this, ICICI Bank also granted about Rs. 3,250 crores to NuPower Renewables.
Before the loan got sanctioned, Dhoot had transferred a controlling stake in NuPower to an associate, Mahesh
Chandra Punglia. After the loan was approved, Punglia had sold his stake to Deepak Kochhar for merely Rs.
9 Lacs.

2016:
Arvind Gupta, a whistleblower, had written to PM Narendra Modi and Finance Minister, Arun Jaitley, putting
allegations of conflict of interest and the act of nepotism in the loans extended by ICICI Bank to NuPower
Renewables. However, the issue got unnoticed.

March 2018:
The whistleblower’s letter got posted on a blog. Th incident happened around PNB Scam case. This time, the
allegations didn’t get unnoticed. But still, the board carefully backed Kochhar and called the letter “malicious
and unfounded rumours”.
But this time, the CBI(Central Bureau of Investigation) had launched a probe.

April 2018:
The CBI issued look-out notices against Dhoot, Chanda Kochhar and her husband in order to ensure that they
couldn’t leave the country secretively.
Meanwhile, the government had changed its nominee on ICICI Bank’s board. Even though no reasons were
offered, the Kochhar row was believed to be the trigger, as questions were raised on the board giving her a
clean chit.
Among all this, Kochhar was accused of not disclosing that, her brother-in-law, Rajiv Kochhar, had helped ICICI
Bank’s debtors restructure their foreign loans. The bank once again defended Kochhar, stating that there was
no financial transaction involved with Rajeev Kochhar. The lender also argued that husband’s brother-in-law
isn’t deemed to be a relative under the Companies Act, so, disclosures aren’t needed.

May 2018:
India’s market regulator, the SEBI, initiated an inquiry against Kochhar and the bank for not making adequate
disclosures. Finally, the board also gave in and decided to conduct an independent probe into the case.

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June 2018:
The ministry of corporate affairs launched an investigation. A former judge of the supreme court, B.N.
Srikrishna, was appointed by the bank to lead the investigation into the loan controversy.
Kochhar went on her annual planned leave, the bank said. It was later announced that Kochhar’s leave will
continue till the probe against her gets completed. In her absence, the bank created a new position to oversee
and manage the lender’s business, and appointed Bakshi.

EFFECT:
ICICI Bank shares underperformed the Nifty bank index since Kochhar’s troubles began at the end of March,
gaining 5 percent compared to an 8.8-percent rise in the sectoral benchmark. The poor performance came in
spite of in-line results, a strong guidance and the fact that it is the cheapest corporate lender in the private
sector.

October 2018:
A month before an independent investigation report by the Srikrishna panel is reportedly set to be submitted
to the bank’s non-executive chairman, Kochhar quits and the board decided to appoint COO Sandeep Bakshi
as the new MD and CEO of the bank.

ICICI share price gained nearly 2 percent in morning on Tuesday after the Reserve Bank of India approved
the appointment of Sandeep Bakhshi as Managing Director & CEO of the country's largest private sector
lender.

7. INDIA’S NPA AND THE GLOBAL SCENARIO

THE CASE OF CHINA

China’s NPAs in the early 2000s were way more than India’s from the period 2001-2005. China has made a
significant effort to counter the problem; today, they are lesser than in India. As on March 2018 China’s Non
Performing Loans Ratio were at 1.8 %. They typically adopted a four-point strategy to address the problems.

1- They reduced risks by strengthening banks and reducing the level of debt for State owned
enterprises. They raised the disclosure standard across the board.
2- Laws were passed allowing creation of asset management companies, foreign equity participation in
securitization and asset backed securitization.
3- Allowing the Government Debt-equity swaps in case any opportunity exited and also ensuring that the
government has the financial losses “discounted”.
4- The government introduced incentives like tax-breaks, exemption from administration fees, and clear
asset evaluation norms.

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W H AT I N D I A H A S T O L E A R N

One of the key concerns, as stated by the IMF too, is the need for an environment for fair valuation of assets.
In cases like that of Kingfisher Airlines, where only one bidder ultimately came forward, the role of asset
reconstruction companies becomes very important. There needs to be a better structural protection for fair
valuations.

The RBI must make an effort to diffentiate between genuine performance-related loan issues and companies
that are taking the system for granted. It is important that schemes like Pradhan Mantri Mudra Yojana are
promoted to provide credit to genuine SMEs and stricter measures are first directed at the big companies that
own huge share of NPAs at the national level.

8. ROAD AHEAD TO TACKLE NPAS

P R O J E C T S A S H A K T is a a five-pronged strategy to resolve bad loans, with the larger ones going to
an asset management company (AMC) or an alternative investment fund (AIF).Project Sashakt was proposed
by a panel led by PNB chairman Sunil Mehta. Bad loans of up to ₹50 crore will be managed at the bank
level, with a deadline of 90 days. For bad loans of ₹50-500 crore, banks will enter an inter-creditor
agreement, authorizing the lead bank to implement a resolution plan in 180 days, or refer the asset to NCLT.
For loans above ₹500 crore, the panel recommended an independent AMC, supported by institutional
funding through the AIF. The idea is to help consolidate stressed assets.

Insights
India is facing a problem of non performing assets(NPA) which is becoming a major problem for the economy
as the days pass. The total quantum of bad loans worth 500 crore or more is around ₹3 trillion in 200
accounts. Prior to this initiative by the government the government has passed many laws before like the
SARFAESI Act,2002 which allowed banks and other financial institutions to auction residential or commercial
properties to recover loans. But the problem is the solution sounds easy but is not working out. Talking about
insolvency and bankruptcy code, which advocated a direct path wherein lenders took to National Company
Law Tribunal(NCLT) for recovery of their loans only 2 of the 12 big cases have found buyers for the
properties which were auctioned. 100’s of smaller cases have found very few buyers which takes me to the
conclusion that although banks are allowed to auction the defaulters properties, they are not able to sell it.
Moving onto Project Sashakt, banks will have to set up an AMC under which there will be multiple sector-
specific AIFs. These funds will invest in the stressed assets bought by existing ARCs, such as ARCIL. The ARCs
will use the funds to redeem security receipts issued to banks against the bad loans. Other AMC-AIFs and
ARCs will be allowed to bid for these assets, and match the pricing offered by ARCIL or the national AMC.
The AMC will be responsible for the operational turnaround of the asset. To explain it in simple terms, the
AMC’s will require funds of around Rs, 1.2 Trillion assuming a 40% recovery before expecting anything out of
the defaulting business. Moreover, it will require funding for around 6-24 months. I think the AMC is unlikely to
work as it is difficult to raise finances or merge stressed resources. It is always easy to take defaulting
borrowers but very difficult to run its day to day operations. This route only gives additional time before
pushing for its bankruptcy. But it may prove to be useful for defaulters within Rs.50 crore as AMC’s provide

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investors with more diversifications and investing options than they would have by themselves as they don’t
have that much expertise .

Project Sashakt will concentrate most decisions to few large lenders like SBI which has 60% share in bad
loans. As there are too many banks in the consortium, there will be fragmented decision making. The ability of
the banks to take haircuts(settle on 40-50% of actual amount) would vary on the capital position which could
make it tough for smaller banks to take a steep haircut. So what looks very good on the paper (Project
Sashakt) is actually a very difficult task to be done. No promoter would want his business to be in the
defaulters list and he would think of different strategies but still he/she failed. Now the same thing will be
done by the AMC’s and AIF so chances of operational turnaround is very bleak. But overall,the government
has taken a bold step and if properly implemented, we can see some relief.

SBI AND BLOCKCHAIN

India’s largest PSB, SBI is looking to create a blockchain based exchange to tackle NPAs. Earlier, in February
2017, SBI shared its plans to launch a BankChain in association with 27 other banks from India and the
Middle East. ICICI Bank, Kotak Bank, DCB Bank and Axis Bank are also part of this. BankChain aims to reduce
fraud while maximising efficiency, security & transparency in the banking systems. The community has also
joined hands with Pune-based Primechain Technologies.

SBI is also using an enterprise blockchain solution for managing its Know Your Customer (KYC) system. The new
blockchain solution will boost the efficiency of financial institutions without compromising on data
confidentiality and transaction security. The idea of introducing a blockchain based solution for doing the
price discovery of NPA’s is essentially the need of the hour.

PROMT CORRE CTIVE ACT ION

The highest amount of gross NPAs has been for country's largest lender SBI at Rs 2,01,560 crore. Among
others, Punjab National Bank was at Rs 55,200 crore; IDBI Bank - Rs 44,542 crore; Bank of India - Rs 43,474
crore; Bank of Baroda - Rs 41,649 crore; Union Bank of India - Rs 38,047 crore; Canara Bank- Rs 37,794
crore and ICICI Bank - Rs 33,849 crore. Seeing the degree of the problem, Government has recently
announced PSBs reforms agenda for responsive and responsible banking, which entails a synergistic
approach for ensuring prudential and clean lending, better customer service, enhanced credit availability,
focus on micro, small and medium enterprises and better governance.

Reserve Bank has issued a Prompt Corrective Action (PCA) framework to maintain sound financial health of
banks. RBI has placed eleven PSBs -- Dena Bank, Central Bank of India, Bank of Maharashtra, UCO Bank, IDBI
Bank, Oriental Bank of Commerce, Indian Overseas Bank, Corporation Bank, Bank of India, Allahabad Bank
and United Bank of India --under the PCA framework.

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9. CONCLUSION
With the detailed research on NPA we got to know that the problem of NPA has not just recently been on the
rise in the recent years but it is due to the RBI’s efforts in changing the methods of classifying NPAs which has
led to India’s GNPA rise to approx. 12%. Currently NPAs amount to approx. 10 Lakh Crores. The public
Sector banks as well as the private banks are under great stress due to this mounting problem of NPAs. But
they are also responsible for it as they hid the bad loans just to maintain their market image. Now we see that
the government is taking innovative steps like Project Sashakt which has recently come in place to tackle the
problem. Banks still do need some capital infusion from the government to get over this problem as the
amount at stake is quite large to handle. Indian Banking System forms a core to the economic development of
the country and we cannot let the banking system fail as it has a cascading effect on the economy as a whole.

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DATA SOURCEs
• https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/6FSRCH2A03EE80004BD4BE2B1508A726
39BA306.PDF
• https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/7FSRCH30FE65675960442D79D84D27DA
1666645.PDF
• https://www.livemint.com/Industry/nGlpknrQMhFV3RK8y4qOfM/NPA-woes-continue-to-dog-
public-sector-banks.html
• https://www.financialexpress.com/economy/dramatic-rise-in-npas-in-india-after-2015-in-one-
chart-and-its-not-modis-fault/1142194/
• https://www.firstpost.com/business/banks-bad-loans-pile-crosses-rs-10-lakh-crore-up-rs-1-
39-lakh-crore-in-march-quarter-the-npa-mess-explained-in-7-charts-4496431.html
• https://www.firstpost.com/business/indias-npa-crisis-arvind-subramanian-is-raghuram-rajan-
in-slow-motion-offers-diagnosis-but-no-cure-4724721.html
• https://corporatefinanceinstitute.com/resources/knowledge/other/non-performing-assets-in-
indian-banks/
• https://economictimes.indiatimes.com/industry/banking/finance/banking/will-the-npa-black-
hole-suck-in-the-countrys-entire-banking-universe/articleshow/64860941.cms
• https://www.thehindu.com/business/Economy/all-you-need-to-know-about-indias-npa-crisis-
and-the-frdi-bill/article21379531.ece
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scenario/article24145872.ece
• http://ijsrst.com/paper/4445.pdf
• https://www.ijrra.net/April2018/ConsComp2018_182.pdf
• https://www.orfonline.org/wp-
content/uploads/2018/07/ORF_IssueBrief_246_NPAs_FinalForUpload.pdf

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