Indian Banks' 'Net NPAs Are Coming Down,' Sitharaman Tells Parliament

Indian banks' gross and net non-performing assets are coming down and profit margins are going up, Union Finance Minister Nirmala Sitharaman told the upper house of parliament during the ongoing winter session on Tuesday.

NPAs are coming down in India every year, she said. International comparisons must factor in the banking distress in Germany and the U.S. and the banks there that are 'going bust,' she said.

"Even last year, major bank collapses happened in the USA, Switzerland and Germany, and here we are showing NPAs coming down year after year; doesn't that indicate the health of the banks in both countries? ...NPAs are coming down, and profit margins are going up in banks," she told the Rajya Sabha.

The net NPA as a percentage was the highest during 2017–18, at 5.94% for scheduled commercial banks and 7.97% for public sector banks, and has come down to 0.95% and 1.24%, respectively, in 2022–23, she said.

Responding to a question on action taken against willful defaulters, she said that the government is taking action against willful defaulters and that banks are taking steps to get money back from willful defaulters.

Sitharaman told the parliament that close to Rs 33,801 crore were recovered till March 31, 2023 and over Rs 15,000 crore was restituted to banks from defaulters on whom PMLA action was taken.

"...over the last two financial years, the number of NPA accounts in SCBs has declined from Rs 2.19 crore to Rs 2.06 crore, showing a decrease of 6.2%. Similarly, the aggregate outstanding of such accounts, i.e., gross NPAs in SCBs, has declined from Rs 7.41 lakh crore to 5.72 lakh crore during the same period, showing a decline of 22.9%," Sitharaman said in response to a question.

Also, the slippage ratio, referring to fresh slippages of NPAs during the financial year as a percentage of standard loans and advances at the beginning of the financial year, of SCBs has declined from 2.74% in FY22 to 1.78% in FY23

In actual terms, the fresh slippages for FY22 and FY23 were Rs 2.86 lakh crore and Rs 2.13 lakh crore, respectively.