The Banking sector mostly public sector Banks are being squeezed between rising bad loans and lower earnings on one side and shortage of capital and burden of obligations toward financial inclusion on the other.
The context of growing non performing assets:
The overall slow down of the economy leads to rise of NPA level, the growing menace of NPAs threatens to destabilize the entire financial structure of the nation.
The accumulation of NPAs is bad for the growth of a stable financial system. If we analyze the performance of banks particularly PSU banks in the last quarter's we will find most of the banks have incurred losses and there is substantial increase in NPA portfolio of banks. Public Sector Banks have seen a surge in their bad loans following the Asset Quality Review and directions from the RBI to classify some large corporate accounts as bad debts. The mounting NPA has also become a matter of great concern for Reserve Bank of India and Ministry of Finance, Govt. of India. Most of the Banks have incurred losses during the last quarter.
The cumulative losses of 8 public sector banks that were in red for the quarter end December 2015 has crossed Rs 10,000 crore the highest ever in the absolute terms. The high losses are because the banks have made huge provisions towards bad loans in the third quarter and most of the banks have tried to clean up their balance sheets as per the requirement of RBI. The magnitude of the problem can be processed from the fact that just 60 big companies were the cause of over Rs 10,000 crore loss to 8 banks during the quarter end December 2015.
Let us have a glance at the NPAs and losses incurred in the third quarter by major public sector banks:-
This story is from the October 2016 edition of BANKING FINANCE.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the October 2016 edition of BANKING FINANCE.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
ICICI Bank partners with PhonePe to offer instant credit on UPI
ICICI Bank announced that it has partnered with PhonePe to offer instant credit on UPI to its pre-approved customers on the app of the digital payments company.
Indiagold Eyes Major Expansion in India's Gold Loan Market
Indiagold, a prominent fintech company specialising in gold loans, is set to disrupt the gold loan industry with its ambitious expansion plans and innovative product offerings.
RBI CIRCULAR
Facilitating accessibility to digital payment systems for Persons with Disabilities Guidelines
Legal News
The Supreme Court announced the launch of a new webpage on its official website providing summaries of landmark judgments.
The Role and Impact of the Insolvency and Bankruptcy Code (IBC) in NPA Recovery
Indian banks, especially grappling with the mounting challenge of Non-Performing Assets (NPAs) within Scheduled Commercial Banks (SCBs), are experiencing a significant downturn in their capacity for credit recycling, resulting in reduced business opportunities and declining profits. However, various factors contributing to the severity of NPA problem are including macro-economic, political, and internal factors, emphasizing the complexity of the issue. With this background, the present study puts an effort to look at the role of the Insolvency and Bankruptcy Code (IBC) in NPA recovery and also showcasing its significance in resolving insolvency and maximizing creditor recovery.
Big Data in Banking: Analysing its Role, Advantages and Challenges
Globally Inflation started rising post April 2021 and went above the target range set by most of the Central Banks. It had remained low and dormant for a substantial duration since the global financial crisis. CPI inflation in developed countries such as US, UK and Euro zone, began to exceed their traditional target of 2% and continue to stay at these elevated levels till recent time.
Is SIP Always the Best Option? A Look into Lump-Sum vs SIP During Volatile Markets
SIP is a method of investing a fixed amount at regular intervals, typically monthly, into a mutual fund. It allows investors to buy more units when prices are low and fewer when prices are high, a process known as rupee cost averaging.
Strategies for Mutual Fund Retail Investors during market downturns
When stock markets experience a decline, mutual fund investors often face a sense of insecurity and apprehension. The volatility can lead to impulsive decisions, which, rather than securing financial health, may impair long-term investment objectives.
The Rise of Green Marketing: Driving Sustainable Change
Green marketing refers to the practice of promoting products or services that are environmentally friendly or sustainable. It involves incorporating eco-friendly elements into various aspects of marketing strategies, including product development, packaging, advertising, and distribution.
Fraud Risk Management In Banking
Fraud risk management is a fundamental aspect of overall Risk Management within the banking sector. In India, banks adhere strictly to guidelines set forth by the Reserve Bank of India (RBI) to prevent, detect, and promptly report fraudulent activities.
