World Journal of Economics and Finance

Vol. 6(1), pp. 157-165, September, 2020. © www.premierpublishers.org. ISSN: 3012-8103

Research Article
Status of NPAs & their Impact on the Public Sector
Banks and the Economy in India.
K. Murugan
Assistant Professor, Department of Economics, Guru Nanak College, Velachery, Chennai-600042. Tamil Nadu, India
E-mail: murugan.kaliappani@gmail.com

The paper is to examine the status of NPAs and their impact of public sector banks and economy
in India. The secondary data were used for the study and simple percentage used. NPAs are
serious threat to the Indian Economy for the past two decades. The increasing mount amounts
of NPAs in banking sector are facing great difficulties in recent two decades. In India, the loans
providing to priority sector is main commitment of all public sector banks. Private sector banks
are providing loan their foremost portion to corporate sector. It is not only after the performance
of banking sector, but also affect the entire economic system in the country. The problems of
stressed assets/ NPAs are not a new concept to our banking system. The paper divides into five
sections. The first section deals with introductory nature and statement of the problem. The
second section is deals with literature review. The data base and methodology has been
presented in third section. The fourth section explores the impact of rising NPAs on public sector
banking performance. Finally, the summary and conclusion has been presented. PSBs should
develop the skills and practices towards credit and credit risk management. The government has
to introduce flexible compensation package and incentives to the managements of PSBs linked
to the performance so that it will improve profitability and reduce NPAs.

Keywords: Non-Performing Assets, Indian economy, Banking sector, RBI, Financial system

INTRODUCTION

The sound financial system plays a crucial role in the
growth and development of any economy like India. A
healthy banking sector is an essential for greater
achievement in growth and development. In India, the
relationships between banking sector and economic
growth have transforming tremendously after the financial
reforms in 1990s. The performance of Indian banking
sector is grow remarkable in deposits collection, sanction
of loans. The percentage share of credit as GDP in
commercial bank picked up progressively from 24 percent
in 2001 to 55 percent in 2017. The banking deposits ratio
also rose from 44 percent to 68 percent during the same
period. Majority of public and private sectors banks are
recorded actively trading at the stock exchanges. The
performance and strength of the banking system improved
during last three decades. These systems supported to
commerce, industry, trade, and personal segments of the
economy (RBI Bulletin, 2019).
The total deposits of all banks in India are reported at Rs.
129 lakh crore during end March 2019. Of which public
sector banks, private sector banks and foreign banks are
contributed Rs. 82, 62,322 crore, Rs. 30, 13,529 crore and
Rs. 4, 92,772 crore respectively. The Public Sector Bank’s
deposits have been increased from Rs. 80,76, 782 crore
in 2017-18 to Rs. 84,36, 275 crore in 2019-20. The SBI’s
continuation is the highest among the public sectors banks
in India. The SBI’s secured the highest deposits and which
is increased from Rs. 20,44,751 crore in 2017-18 to Rs.
29,11,386 crore in 2019-20. During three years period, the
deposits rate of these banks has increased to Rs. 9 lakh
crore. Followed by Punjab National Bank’s are secured
second place in terms of deposits in India. The bank’s
collected deposits, which is increased from Rs. 6,21,704
crore in 2017-18 to Rs. 6,76,030 crore in 2019-20. The
Bank of Baroda’s is recorded the third place and which is
increased from Rs. 6,01,675 crore in 2017-18 to 6,38,690
crore in 2019-20. Union Bank of India is recorded the
fourth place in terms of deposit collection and which is

Status of NPAs & their Impact on the Public Sector Banks and the Economy in India.
K. Murugan 158
increased from Rs. 3,75,899 crore to Rs. 4,15,915 crore in 482 crore in 2017-18 to Rs. 3, 41,006 crore in 2019-20.
the same period (RBI Banking Study, 2019). Canara Bank is also registered fifth place and which is
On the negative aspect, the weakening of the asset quality increased from Rs. 3, 42,009 crore to Rs. 4, 27,727 crore
of the Indian banking sector is a serious threat to the in the same period.
economy. It is indicates growing stress in the banking
system. As a result, significant stress has increased in the
banking system. According to Reserve Bank of India, the Statement of the Problem
Stressed Advances ratio in banking sector is 12.2 percent
and the Gross Non‐Performing Advances (GNPA) as ratio NPAs are serious threat to the Indian Economy for the past
to gross advances has risen to 10.2 percent during two decades. The increasing mount amounts of NPAs in
September 2017 (RBI, Financial Stability Report, banking sector are facing great difficulties in recent two
decades. In India, the loans providing to priority sector is
December 2017). The ratio of Gross Non‐Performing
main commitment of all public sector banks. Private sector
Advances (GNPA) to gross advances of the PSBs was as
banks are providing loan their foremost portion to
high as 13.5 percent during September 2017. On the other
corporate sector. It is not only after the performance of
side, the financial health of the Private Sector Banks is
banking sector, but also affect the entire economic system
found to be comparatively in a better shape; however, in
in the country. The problems of stressed assets/ NPAs are
recent years, there has been substantial growth of bad
not a new concept to our banking system. A significant
loans in the private banks. The growing incidence of bad
increase in NPAs of the banking system, particularly in
loans has serious implications for the banking sector and
public sector banks (PSBs), is a matter of concern. The
economy.
global slowdown and speculative market situations are
affect the Indian banking system. Especially, PSBs is
The gross NPAs of PSBs rose from Rs. 2, 79,016 crore
operating under uncertainty, constraints and political
during March ended 2015 to Rs. 8, 95,601 crore during
pressure. This situation is leads to stressed assets and
March ended 2018 and further it decline to Rs. 8, 06,412
high level of NPA are affecting the entire economic system.
crore during March ended 2019 (RBI Financial Stability
After economic reforms 1991, the country has face two
Reports, 2019). The total amount of gross NPAs of PSBs
NPA problems, one was happen during 1997-2002 and
and Scheduled Commercial Banks (SCBs) were Rs.
second is going on after the global financial crisis of 2008.
8,06,412 crore and Rs. 9,49,279 crore during March ended
The NPAs is started on 2010. It is leads to slowing
2019, respectively. The gross NPAs of PSBs have
economic growth extended to the priority sector (Singh,
declined from the peak of Rs. 8, 95,601 crore in March
2016; Sengupta and Vardhan, 2017). The primary causes
2018 to Rs. 8,06,412 crore in March 2019. PSBs have
of NPA increases due to deficiencies in procedures
recovered Rs. 3, 59,496 crore over the last four financial
followed in PSBs and private sector banks in India. Theses
years, including record recovery of Rs. 1, 23,156 crore
banking could not take adequate steps to collect the NPA.
during 2018-19 (Ministry of Finance, Government of India,
The reasons is majority of the borrowers are political
June 2019).
influence, breakdown of legal system (Financial Stability
Report, December 2018).
According to Reserve Bank of India data (2019) the total
gross advances of Public Sector Banks (PSBs) increased
from Rs. 18,19,074 crore during March ended 2008 to Rs.
52,15,920 crore during March ended 2014. The total
LITERATURE REVIEW
advance of all banking sector in India is recorded to Rs. 87
lakh crore during March ended 2018. Out of that, Public
Various research studies are an overview of some of the
sector, private sector and foreign banks has disbursed as
existing literature with regard to the NPA. Bidani (2002)
advances of Rs. 56, 97,350 crore, Rs. 26, 62,753 crore
argued that non-performing assets are the smoking gun
and Rs. 3, 59,336 crore, respectively. The reason for
threatening the very stability of Indian banks. NPAs wreck
increase in stressed NPA is willful default, loan frauds,
a banks’ profitability both through a loss of interest income
corruption in some cases and economic slowdown. The
and write-off of the principal loan amount. Another study
total public sector bank’s advance distribution has
Paul Purnendu, Bose, Swapan and Dhalla, Rizwan (2011)
increased from Rs. 55, 57,232 crore in 2017-18 to 59,
attempted to measure the relative efficiency on Non-
26,286 crore in 2018-19. Of which, SBI has distributed
Performing Assets. NPA is a negative financial indicator to
highest advance among the banking sector. The SBI’s
measure efficiency of Indian public sector banks. Another
distribution has increased from Rs. 15, 71,078 crore in
study by Selvarajan and Vadivalagan, (2012) analysis the
2017-18 to Rs. 21, 85,877 crore in 2019-20. During three
NPA is not a facing exclusively the bankers; it is in fact an
years period, SBI has increased their distribution of Rs. 6
all pervasive national scourge swaying the entire India.
lakh crore. PNB is the second bank and which is increased
NPA have affected the profitability, liquidity and
from 4, 19, 493 crore to Rs. 4, 58,249 crore. Bank of
competitive functioning of banks and developmental of
Baroda is the third bank recorded highest distribution and
financial institutions. NPAs do not generate any income for
which is increased from Rs. 3, 83,259 crore to 4, 68,819
the banks. Another study conducted by Veerakumar
crore. The Bank of India is recorded the fourth place in
(2012) mentioned that the banking sector has been facing
terms of loan distribution and which is declined from 3, 66

Status of NPAs & their Impact on the Public Sector Banks and the Economy in India.
 World J. Econ. Fin. 159

serious problems of raising NPAs in India. NPAs have
choked off quantum of credit, restriction the recycling of
funds and leads to asset-liability mismatches. It also
affected profitability, liquidity and solvency position of the
Indian banking sector.
Debarsh and Sukanya Goyal (2012) emphasized on
management of NPAs in the public sector banks in India.
NPA is an important parameter in the analysis of financial
performance of a bank. It results in decreasing margin and
higher provisioning requirements for doubtful debts. The
reduction of NPA is necessary to improve profitability of
banks. Kavitha (2012), stated that an assessment of NPA
on profitability its magnitude and impact. Credit of total
advances was in the form of doubtful assets in the past and
has an adverse impact on profitability of all Public Sector
Banks affected at very large extent when non-performing
assets work with other banking and also affect productivity
and efficiency of the banking groups.
The objective of study is to impact of NPAs in public sector
banks on economic growth in India. The paper divides into
five sections. The first section deals with introductory
nature, statement of the problem and objective of the study.
The second section is deals with literature review. The data
base and methodology has been presented in third section.
The fourth section explores the impact of NPAs in public
banking sector on economic growth and the summary and
conclusion.
DATABASE AND METHODOLOGY
The research data is collected from various government
publications such as Department of Banking Supervision,
RBI, Lok Sabha Questions and Answers Government of
India, and Ministry of Finance, Government of India. The
data relating to non-performing asset, spread burden, other
indices of all twenty seven public sector banks is covered
and simple percentage is calculated.
RESULTS AND DISCUSSION
Public sector banks constitute the heart of banking sector
because they handle more than two-third of banking
business in India. The gross NPAs of banking sector are
estimated at 5 percent of total loans. The gross NPAs of 24
listed public sector banks stood at Rs. 7, 39,541 crore
during ended March, 2019. The gross advances has been
continuously increasing from 1996-97 to 2018- 19 and
increased to 59, 26,286 crore from 2, 44,214 crore. Gross
NPAs is also showing the upward trend and increased to
739541 crore in 2018-19 from 43577 crore in 1996-97.
Similarly the percentage of NPAs has declined from 17.8
percent in 1996-97 to 2.0 percent in 2008-09 after that it
has increased to 12.5 percent in 2018-19.

Table 1: Gross Advances and Gross NPAs of SCBs (Amount in Billion)

Year (End- Advances Non-Performing Assets
March) Gross Net Gross As Percentage of Gross Net As Percentage of Net
Amount Advances Amount Advances
1996-97 244214 220922 43577 17.8 20285 9.2
1997-98 284971 260459 45653 16.0 21232 8.2
1998-99 325328 297789 51710 15.9 24211 8.1
1999-00 379461 352714 53033 14.0 26187 7.4
2000-01 442134 415207 54672 12.4 27977 6.7
2001-02 509368 480681 56473 11.1 27958 5.8
2002-03 577813 549351 54090 9.4 24877 4.5
2003-04 661975 631383 51537 7.8 19335 3.1
2004-05 870851 854214 46599 5.4 16904 2.0
2005-06 1134724 1106288 42117 3.7 14566 1.3
2006-07 1464493 1440146 38968 2.7 15325 1.1
2007-08 1819074 1797401 40600 2.2 17836 1.0
2008-09 2283473 2259212 45918 2.0 21155 0.9
2009-10 2519331 2701300 57301 2.3 29643 1.1
2010-11 3079804 3304433 71042 2.3 36055 1.1
2011-12 3550389 3877308 112488 3.2 59391 1.5
2012-13 4560169 4472845 164461 3.6 90037 2.0
2013-14 5215920 5101137 227264 4.4 130635 2.6
2014-15 5616718 5476250 278468 5.0 159951 2.9
2015-16 5821952 5593577 539956 9.3 320376 5.7
2016-17 5866373 5557232 684732 11.7 383089 6.9
2017-18 6141698 5697350 895601 14.6 454473 8.0
2018-19 5926286 0 739541 12.5 285122 4.8
Source: dbie.rbi.org.in

Status of NPAs & their Impact on the Public Sector Banks and the Economy in India.
K. Murugan 160
Table 1 represent trend, magnitude and composition of
gross advances and non-performing assets of public
sector banks in India. It means that public sector banks
started to provide credit to the non-priority sector in the
form of personal and consumer loan which directly or
indirectly invested in the real estate market and created
artificial hike and boom in the prices of housing property.
On the other side, the public sector banks adopted strict
credit policy for high-risk endowment of priority sectors.
Gross NPAs increased, comparatively lower rate of 12.5
percent in 2018-19 against double-digit growth of 14.6
percent 2017-18. This could be due to lower incremental
NPAs being generated. The moderation in growth of NPAs
indicate that the recognition cycle is over. The Gross NPAs
stood at Rs 9.03 lakh crore during December 2018 of
which Rs 7.75 lakh crore resided in PSBs and Rs 1.28 lakh
crore in Private Banks. NPA ratio increased to 14.06
percent in 2017-18 from 5 percent in 2014-15. NPAs of
.
Table 2: Kick out Bad Loans (Non-Performing Assets of) Banks in India: 1997-98 to 2019-20
Year Gross NPA (Rs. in Crores)
1997 47,300
1998 50815
1999 58554
2000 60408
2001 63883
2002 54673
2003 54090
2004 51537
2005 48399
2006 41358
2007 38968
2008 39030
Source: RBI Bulletin
Table 2 shows that kick out bad loans (NPAs) Banks in
India during 1997-98 to 2019-20. NPA is a harmful to the
Public Sector and Private Sector Banks in India. These
banks are distributed large size of loans to the business
men during two decades. The Gross-NPA of banks has
increased tremendous amount during last two decades.
The distribution of Gross-NPA in India has increased from
Rs. 47,300 crore in 1997-98 to Rs. 54,090 crore in 2003-
04. There is slow progress in Gross-NPA during last six
years.
Thereafter, the disbursement of Gross-NPA has been
declined from Rs. 51, 537 crore in 2004-05 to Rs. 39,030
crore in 2008-09. During first UPA Government, the Gross-
NPA has been declined due to collection of bad loans from
concerned parties. The total amount disbursed in terms of
Gross-NPA is Rs. 2, 19,292 crore during first UPA
Government. During second UPA Government, the
distribution of Gross-NPA has been increased from Rs.
Status of NPAs & their Impact on the Public Sector Banks and the Economy in India.
Public sector banks (PSBs) are thrice that of the private
banks during March 2019. NPA ratio of PSBs stood at 12.5
percent, while that of private banks stood at 4.16 percent
at the end of Third Quarter 2019 (CARE Rating 2019).
The Gross-NPAs of public sector banks in 1996-97 was
Rs. 43577 crore and it was increased to Rs. 739541 crore
in 2018-19, 17 times increased. It is interesting that
corporate debt restructuring. It may be corporate debt
restructuring increases the total NPAs increases. Wilful
default, insolvency, poor performance in certain core
sectors such as power, coal, steel, infrastructure are the
reasons for this restructuring. When the performance of
core sectors deteriorates banks provide more amount of
loan to revive it but how far it is beneficial for the banking
industry is a big question before the policy maker and
regulators
Year Gross NPA (Rs. in Crores)
2009 44957
2010 59927
2011 74664
2012 1,17,000
2013 1,64,461
2014 2,16,739
2015 2,78,877
2016 5,39,955
2017 6,84,733
2018 8,95,600
2019 7,39,541
44,957 crore in 2009-10 to Rs. 1,64,461 crore in 2013-14.
The total amount disbursed is Rs. 4, 61,009 crore during
second UPA Government period. The comparative
analysis between first UPA Government and second UPA
Government, nearly 52.43 percent increased of NPA. The
Gross-NPA is increased in terms of amount of Rs. 2,
41,717 crore during the second UPA Government.
During first NDA Government period, the disbursement of
Gross-NPA has been increased from Rs. 2, 16,739 crore
in 2014-15 to Rs. 8, 95,600 crore in 2018-19. The total
amount disbursement in terms of Gross-NPA is Rs. 26, 15,
904 crore during first NDA Government period. The
comparative analysis between second UPA Government
and first NDA Government the share is increased to 82.38
percent. The first NDA Government alone disbursed
Gross-NPA is Rs. 21, 54,895 crore. When compared with
earlier UPA Government, NDA Government is issued
highest of credit issued.
Table 3: Fresh Bad Loans in Public Sector Banks for 12 Years
Year Gross NPA (Rs. in Crores) Year Gross NPA (Rs. in Crores)
2009-10 44,818 2014-15 1,92,034
2010-11 58,226 2015-16 3,85,962
2011-12 92,808 2016-17 3,27,500
2012-13 1,19,613 2017-18 5,00,000
2013-14 1,63,546
Source: Department of Banking Supervision, RBI.

Table 3 explained the fresh bad loans in Public Sector
Banks during 2009-10 to 2017-18. The fresh bad loan has
been distributed from Rs. 44,818 crroe in 2009-10 to Rs.
58,226 crore in 2010-11. In addition that, it has increased
to Rs. 1, 63,546 crore in 2013-14. The total amount of fresh
bad loans is distributed Rs. 4, 79,011 crore during the
second UPA Government during 2009-14. During first
NDA Government, the distribution of fresh bad loans has
increased from Rs. 1, 92,034 crore in 2014-15 to Rs. 5,
00,000 crore in 2017-18. The total distribution of fresh bad
loan is to Rs. 14, 05,496 crore. The NDA Government
alone distributed loan to the business firms is in terms of
percentage of bad loans increased to 66 percent. These
mount amount of bad loans are highest among the two
decades in the country.
Bad loan crisis in Indian banking system was not alarming
enough, there is ticking time bomb that can spark another
crisis for the industry. Loan worth Rs. 3.5 lakh crore have
not been recognized by Banks in India as NPA. They run
risk of turning sours, India rating as part of global rating
agency. India Rating and Research, Rs. 13 to 14 Lakh
crore stressed corporate loans, banks have recognized
only Rs. 10 lakh crore during September, 2018.

Table 4: Bad Debts Written-off in Public Sector Banks during 2001-02 to 2018-19
Year Amount Written-off Rs. in Year Amount Written-off
Crores Rs. in Crores
2001 5555 2011 17794
2002 6428 2012 15551
2003 9448 2013 27013
2004 11308 2014 32595
2005 8048 2015 49976
2006 8799 2016 59400
2007 9189 2017 81684
2008 8019 2018 128230
2009 6966 Total 4,97,188 Crore
2010 11185
Source: Department of Banking Supervision, RBI.

Table 4 presents bad debts written-off in Public Sector
Banks during 2001-02 to 2018-19. It is observed the
amount of write offs have been increasing among public
sector banks for the two decades. The written-off bad
loans have been increased to 1, 28,230 crore in 2018-19
against Rs. 5,555 crore in 2001-02. It is increased to
twenty three times. Totally Rs. 4, 97,188 crore is written-
off as bad loans by public sector banks in India during two
decades.
Table 5 where the profits go by Public Sector Banks in
India during past 12 years. It means the earning of public
sector banks is adjusted to NPA. After the earning of
profits, it is deducted by NPA. The bad loans/ NPA are
adjusted from profits of PSBs in India. It is worst type of
calculation made the banks as well as union government.
The Union Government has more power regarding all the
financial matter. But government could not execute single
agenda against borrower from the banks.

Table 5: Where the Profits Go by Public Sector Banks in India: (Rs. in Crore)
Year Gross Profit Before Provisions made Published Net Profits
Provisions for Bad Loans for Bad Loans/ NPAs
2008-09 45,494 11,121 34,373
2009-10 57,293 18,036 39,257
2010-11 74,731 29,830 44,901
2011-12 87,691 38,177 49,514

Status of NPAs & their Impact on the Public Sector Banks and the Economy in India.
2012-13 93,684 43,102 50,582
2013-14 1,27,652 63,389 37,018
2014-15 1,37,817 76,837 37,540
2015-16 1,36,926 1,60,303 -17,993
2016-17 1,58,982 1,68,469 -11,388
2017-18 1,55,585 ,270,953 -85,371
2018-19 1,49,804 2,16,410 -66,606
Source: Department of Banking Supervision, RBI.

The Public Sector Banks are earning more profits during
2008-09 to 2018-19. The gross profits of PSB are
increased to Rs. 1, 49, 804 crore in 2018-19 against Rs.
45,494 crore in 2008-09. But the gross profit is adjusted to
bad loans/ NPA every year by banking sector. After the
deduction of NPA from profit, the net profits are increased
to Rs. 50, 582 crore in 2012-13 against to Rs. 34,373 crore
in 2008-09. After that it declined to Rs. 37,540 crore in
2014-15.
It is observed that net profits are increased after deduction
of NPA from profits during second UPA Government. After
that, net profit is recorded Rs. 34,540 crore during 2014-
15. Thereafter, PSB are making net loss during First NDA
Government.

Table 6: Willful Defaulters as on 31.03.2018

Name of the Bank Willful Defaulters
Numbers Amount in Crore
State Bank of India 1680 34,436
Punjab National Bank 1090 15,190
Bank of India 422 7,463
Bank of Baroda 303 6,253
Central Bank of India 787 6,197
UCO Bank 656 5,722
Union Bank of India 803 5,103
Vijaya Bank 142 5,041
IDBI Bank 116 4,828
Canara Bank 491 4,759
Indian Overseas Bank 527 4,485
Oriental Bank of Commerce 424 4,215
Allahabad Bank 250 3,965
Andhra Bank 394 3,957
Corporation Bank 122 2,453
Dena Bank 228 1,877
United Bank of India 387 1,737
Bank of Maharashtra 212 1,518
Indian Bank 67 1,373
Syndicate Bank 203 1,162
Punjab and Sind Bank 27 283
Total 9,331 1,22,018
Source: Department of Banking Supervision, RBI.

Table 6 explained with willful defaulters in India as on
31.03.2018. SBI has announced more defaulters during
that period. The number of defaulters announced by SBI is
1680 and in terms of amount Rs 34,436 crore. Punjab
National Bank is having the second highest defaulters of
1090 and in terms of amount Rs. 15,190 crore. Bank of
India is having third highest defaulters of 422 and in terms
of amount Rs. 7,463 crore. On the contrary, Indian Bank is
having lowest defaulters of 67 and in terms of Rs. 1,373
crore. Followed by Syndicate Bank is having defaulters of
203 and Rs. 1162 crore. Punjab and Sind Bank is having
lowest defaulters of 27 and Rs. 283 crore during that
period. The total defaulters are 9331 and they borrowed
Rs. 1,22,018 crore.

Table:7 Top 12 Bad Loans Referred to IBC (Rs. in Crore)

Name of the Company Rs. in Crore Name of the Company Rs. in Crore
Bushan Steel 44,478 7. Monnet Ispat 12,115
Bushan Power & Steel 37,248 8. Electro steel Steels 10,273
Lanco Infra 44,364 9. Era Infra 10,065

Status of NPAs & their Impact on the Public Sector Banks and the Economy in India.
Eaasr Steel 37,284 10.Jaypaee Infratech 9,635
Alok Industries 22,075 11. ABG Shipyard 6,953
Amtek Auto 14,074 12. Jyoti Structures 5,165
Total Rs. 2,53,729
Source: Department of Banking Supervision, RBI.

Table 7 explained that top 12 bad loans referred to IBC
(Rs. in crore). Bushan steel company is the top defaulters
and borrowed Rs. 44, 478 crore. Lanco Infra has borrowed
second highest defaulter with Rs. 44, 364 crore. Followed
by Bushan Power & Steel is third place and borrowed Rs.
37, 248 crore. On the other hand, ABG Shipyard is
borrowed lowest defaulter with Rs. 6953 crore and
followed by Jyoti Structures is borrowed Rs. 5,165 crore.
The total amount of top defaulters in India is borrowed Rs.
2, 53, 729 crore

Table 8: Reduction in NPA of Public Sector Banks in India due to Write-off

Bank 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Allahabad 643 720 1001 1352 82 2109 2126 2442 3635 4219
Andhra Bank 192 150 169 354 263 1124 814 1623 1666 2280
BOB 515 501 1215 2356 964 1563 1554 4348 4948 13102
BOI 744 880 2415 2415 1767 866 2374 7346 8976 7405
BOM 236 350 395 663 401 264 903 1374 2460 5227
Canara Bank 1290 1050 1460 1535 1591 1472 3387 5545 8310 14267
CBI 294 554 629 1061 1995 1386 1334 2396 2924 10375
Corporation 267 543 565 709 463 779 2995 3574 8228 5989
Dena Bank 185 196 194 237 479 515 760 833 661 4672
IDBI 477 884 319 383 1393 1609 5459 2868 12515 15918
Indian Bank 388 590 506 520 628 550 926 437 1606 2872
IOB 389 971 1166 1642 1472 2087 2067 3066 6908 7794
OBC 389 696 933 1416 1252 925 1668 2308 6357 6457
P&S Bank 81 66 39 50 204 263 335 491 460 1635
PNB 853 1592 126 997 1947 5996 6485 9205 7407 9983
Syndicate Bank 419 351 891 1297 1025 1055 1430 1271 2400 6775
UCO 371 586 391 617 1423 0 1573 1937 2735 4420
Union Bank 513 1126 938 1129 913 931 792 1264 3477 7771
United Bank 174 415 233 1094 481 761 649 714 1867 5365
Vijaya Bank 479 327 214 543 296 791 510 1068 1539 1518
SBBJ 23 166 275 463 399 363 643 1560 0 0
SBH 71 202 265 343 31 355 1204 1430 0 0
SBI 1990 4007 744 5594 13177 21303 15955 20339 39151 58905
SBI Indore 57 0 0 0 0 0 0 0 0 0
SBM 20 311 165 275 403 740 588 161 0 0
SBP 5 410 120 28 463 755 1156 3528 0 0
SBT 124 152 182 176 196 456 398 556 0 0
Total Rs. 11189 17796 15550 27249 33708 49018 58085 81684 128230 196949
Source: Lok Sabha Questions and Answers Government of India, New Delhi Note: Total reduction in Non-NPA since
2009-10 till the financial year 2018-19 due to write-off amounted to Rs. 6,19,458 crore

Table 9: Gross Advances & Gross NPA Ratio of Public Sector Banks during 2018 (Rs. Crore)
Name of the Banks Gross NPAs Gross Advances Gross NPAs to Gross
Advances Ratio (%)
Allahabad Bank 26562.79 166435.9 15.96
Andhra Bank 28124.36 164534.5 17.09
Bank of Baroda 56480.39 460744.4 12.26
Bank of India 62328.46 375995.5 16.58
Bank of Maharashtra 18433.23 94645.2 19.48
Canara Bank 47468.47 400843.5 11.84
Central Bank of India 38130.7 177484 21.48
Corporation Bank 22213.44 128005.3 17.35

Status of NPAs & their Impact on the Public Sector Banks and the Economy in India.
Dena Bank 16361.44
IDBI Bank 55588.26
Indian Bank 11990.14
Indian Overseas Bank 38180.15
Oriental Bank of Commerce 26133.64
Punjab and Sind Bank 7801.647
Punjab National Bank 86620.05
State Bank of India 223427.5
Syndicate Bank 25758.61
Uco Bank 30549.92
Union Bank of India 49369.93
United Bank of India 16552.11
Vijaya Bank 7526.095
Public Sector Banks 895601.3
Source: Department of Banking Supervision, RBI.
Gross-Non-Performing Assets, Gross Advances and
Gross NPA Ratio of Public Sector Banks during 2018 is
given in Table 9. The total gross NPA of all Banks in India
is to Rs. 895 601 crore against gross advance Rs.
6141698 crore during 2018. The percentage share of
gross NPAs to Gross Advances is 15 percent. Within the
public sector banks write offs have been higher for the
State Bank group than for nationalised banks. These
banks has outstanding gross NPA is 2234 28 crore against
gross advance Rs.2048387 crore. The percentage of
share of gross NPA is 11 percent. PNB is recorded amount
Rs. 86620 crore against gross advance Rs. 471297 crore.
The percent share of gross NPA to gross advance is
recorded highest by IDBI (28 percent) followed by IOB
(25.28 percent), UCO bank (25 percent) and United Bank
of India (24 percent).
SUMMARY AND CONCLUSIONS
After the economic reforms 1991, banking sector reforms
were performance by successive governments during
three decades. The main aim is to de-regulate the banking
sector and liberalize the existing controls. While banks
continue in public sector, the equity holding of the
Government has been dilutes from 100 percent and the
law has been amended to allow private sector capital upto
49 percent. In 2000, the Government brought to Bill to
increase this to 66 percent, but due to the struggle of bank
employees, it could not be carried through. Thus
privatization was averted at that time. But the attempts to
weaken public sector banks have continued and
Government desires to pursue their agenda on banking
reforms. The main agenda is to privatize these banks and
this would imply privatizing the huge and precious savings
of the people.
The country is needed banking expansion not
consolidation: Even though the public sector banks have
grown impressively in terms of branch expansion and
proliferation even though thousands of branches have
been opened in the remote rural areas, still banks are yet
to reach every one. In a big way announcement of Finance
Status of NPAs & their Impact on the Public Sector Banks and the Economy in India.
74238.58 22.04
198853.1 27.95
162725.6 7.37
150999.3 25.28
148206 17.63
69738.78 11.19
471296.6 18.38
2048387 10.91
223346.1 11.53
123989.5 24.64
313859.9 15.73
68691.77 24.10
118677.4 6.34
6141698 14.58
Minister has informed the nation that 10 public sector
banks (PNB, Canara Bank, Union Bank of India, Indian
Bank, United Bank of India, Allahabad Bank, Syndicate
Bank, Corporation Bank, Oriental Bank of Commerce and
Andre Bank) was merged in five sbanks. The net result of
this will be following 6 banks like Allahabad Bank founded
in 1865, Andre Bank founded in 1923, Corporation bank
founded in 1906, Oriental Bank of Commerce founded in
1943, Syndicate Bank founded in 1925 and United Bank
of India founded in 1950. Government may call it a merger
but in reality it is cold-blooded murder of 6 banks. Because,
after merger, these six banks have been built up over the
years will disappear from the banking scenario.
In the last 50 years, the nationalized banks have made a
phenomenal contribution in building up a strong economy
with a visible social orientation. 8000 branches have
become 90000 branches of which, 40000 branches in
located in rural and semi-urban area, which were easier
achievements. In 2008, when the entire Globe was facing
financial turmoil and banking tsunami, Indian banking
system was safe because of our public sector banks.
The Government talks of prosperity for all but by closing
down these six banks, six main arteries of the banking
system are being cut off. The victim banks like Allahabad
Bank, Andre Bank, Corporation bank, Oriental Bank of
Commerce, Syndicate Bank and United Bank of India are
very good banks and have catered to the economic
development in these respective geographic areas in a big
way. Suddenly deciding to close these banks is
inappropriate and unwarranted as well as harmful to the
economy. The country is facing serious economic
slowdown and downturn. Public sector banks with their
huge resources commend can play a decisive role to
revive the economy. In fact, only last week our FM has
assigned important jobs for our bank in boosting the
economy. The decision to merge and close banks is a total
diversion from these tasks. Bank themselves face
problems due to huge pile of bad loans. Bad loan crisis in
Indian banking system was not alarming enough, there is
ticking time bomb that can spark another crisis for the
industry.

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Accepted 10 July 2020
Citation: K. Murugan, (2020). Status of NPAs & their
Impact on the Public Sector Banks and the Economy in
India. World Journal of Economics and Finance, 6(1):
157-165.
Copyright: © 2020 K. Murugan. This is an open-access
article distributed under the terms of the Creative
Commons Attribution License, which permits unrestricted
use, distribution, and reproduction in any medium,
provided the original author and source are cited.