The percentage of non-preforming assets of Indian banks and financial institutions have always been alarming. A report by Reserve Bank of India mentions that the gross percentage of non-performing assets in the Indian banking sector may shoot up to 8.5 percent by March, 2017 from 7.6 percent in 2016. The writing off wilful debts to the tune of 7010 crores by State Bank of India, India’s largest public sector bank in November, 2016 is a case in point.
Non-Performing Assets have always sent shock waves to the banks and financial institutions in the country. It has proved to be stumbling blocks and belittles the stupendous records and success created through our financial systems. Even economists and financial analysts wonder if there is a panacea to this menace. The claims of massive economic growth, cleansing efforts like demonetarisation will prove to be an oxymoron if sufficient checks and balances are not in place and strictly enforced to wipe away the stressed assets from our financial system.
Liquor baron Vijay Mallaya fleeing away the country with an unpaid loan of 9000 crores is a mockery of our loan recovery process. Declaring him as a wilful defaulter and the hype around the ‘wilful defaulter’ clause proves that regulations have little relevance to enforcement, in the case of loan recovery process in India. Another shocking revelation is the fact that the public sector banks in India were struggling with non-performing assets worth 6, 00,000 crores (approximately) as on March, 2016.