ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Bank Credit: Who Are the Non-Performers?

Bank Credit: Who Are the Non-Performers?

increased from 48 per cent to 55 per cent in the same period. In absolute terms, while priority sector non-performing assets increased by Rs 4,507 crore during the five-year period, nonpriority sector non-performing assets rose by Rs 10,653 crore. Clearly, banks should really be worrying about their non-priority sector lending.

The Reserve Bank of India, there is reason to believe, has overstated the increase in priority sector lending in the recent period in its Report on Trend and Progress of Banking in India, 1999-2000 (see 'Bank Credit: Eroding Priority', November 18). Closely connected with the hesitation of the government-owned banks to go in for larger priority sector advances has been the widespread suspicion that since recoveries from the priority sector are difficult to enforce, the non-performing assets (NPAs) of banks tend to increase, the more they lend to the priority sector. Actually this apprehension of the banks is not supported by facts. This can be seen from the information available in the same RBI report.

According to the RBI report, the proportion of non-performing assets of banks relating to priority sector declined between 1995 and 2000, from 52 per cent to 45 per cent. On the other hand, non-performing assets relating to the non-priority sectors increased from 48 per cent to 55 per cent in the same period. In absolute terms, while priority sector non-performing assets increased by Rs 4,507 crore during the five-year period, non-priority sector non-performing assets rose by Rs 10,653 crore. Clearly, banks should really be worrying about their non-priority sector lending.

Dear reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here

Comments

(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top