Increasing NPAs of banks pose a threat to India’s economy

When the corona virus epidemic hit, Prime Minister Narendra Modi had said that, Indian banks will remove Indian economy from this problem.

But now the banks themselves seem to be stuck in trouble. Indian banks are currently steeped in heavy NPAs. And they do not see getting their debt back. In view of this, Prime Minister of India Narendra Modi organized a meeting with major Indian banks. In this meeting, Prime Minister Narendra Modi said that I know that Indian banks are afraid of giving loans at this time. But people who are good and who can be given loans. They should not deny it. This will boost India’s economy.

But how much Indian bank believes this talk of Prime Minister Narendra Modi. It will be interesting to see, because the NPAs of banks in India have gone up by about 9%. Which is a dangerous level.

NPAs of Indian banks are increasing continuously

Indian banking system
indian banking system

It is not that only after the corona virus epidemic, the NPAs of banks are large. But it can be said that due to the corona virus epidemic, the NPAs of banks have started increasing rapidly. The loans that banks gave to industry husbands are not coming back.

In such a situation, Indian banks seem to be stuck in difficulty. This concern can also be seen clearly on the face of Indian Prime Minister Narendra Modi.

For the last 6 years, NPAs have been increasing continuously on Indian banks and the government has had to face two-four with this problem. Now the government does not see any way to save these banks. In such a situation, the responsibility of reducing the NPA has been given to these banks. The government is constantly pressurizing banks to reduce their NPAs. On the other hand, banks are also being pressurized to give loans to Indian industrialists. It will be interesting to see how the two work together.

Recently, the government announced an economic package of 20 lakh crore rupees to get the Indian economy out of the corona virus. In this package, a provision was made that Indian banks would give a loan of three lakh crores rupees to industrialists.

Now Indian banks are afraid that a large part of it may not go into the NPA. And if this happens, the NPAs of Indian banks will increase further. And may pose a threat to the Indian banking system.

Urjit Patel’s statement is important

Earlier, former RBI Governor Urjit Patel had said that the government had asked for laxity in NPA whenever he was governor. And the industrialists who are not returning their debts. May be shown softness on them. This increased the NPAs of Indian banks even more. It also shows the drawbacks of the government system. The government does not pay attention to reducing NPAs. Then the condition of the banks gets worse. In such a situation, when the banks start sinking, then the government merges such banks with another big bank. But is this the right way. To save the banks. It will be interesting to see. But so far the Narendra Modi government has completely failed to deal with the increased NPA.

At the same time, former Congress president and current Wayanad MP Rahul Gandhi has also been continuously expressing concern about the Indian economy. Rahul Gandhi is seen to surround the government on this issue. Rahul Gandhi is continuously accusing the Modi government that he has completely ruined India’s economy.

Government’s focus only on merging banks

Whenever a government bank starts sinking, the government merges that bank in a big bank. Recently, there was a news in the media that the government may merge some more banks with big banks. Let us tell you for information that recently the merger of state-run banks was done. After that, only 10 state-run banks remained in India.

Now news is coming that 5 more banks can be merged into big public sector banks. And if this is done then only 5 state-run banks will remain in India.

The government has almost withdrawn from running public sector banks. However, the government did provide some capital to run public sector banks. But this seems inadequate, as well as the rising trust of customers from banks has also become a headache for banks.

Indian customers are continuously withdrawing large amounts of money from banks. And the government is constantly giving customers confidence that there is no threat to banks. But people are not ready to accept. In such a situation, it is becoming increasingly difficult for the government to get out of this confusion. And the increasing NPA is increasing the problems even more.

Growing of big banks is difficult

The Indian banking system system is constantly going through difficult times. Whenever a small government bank comes in trouble, the government merges it with the performing bank. This also increases the NPAs of large public sector banks. Because the already poorly performing public sector bank also increases the NPA of the big bank. And large public sector banks also have an impact on lending capabilities.

In such a situation, the merger of banks is also not showing any effective effect in improving the banking system. The capital that was put into the Indian banking system by the government. He feels cumin in the camel’s mouth.

Scam is also a big problem in the banking system

It is not that only NPAs have emerged as a problem for public sector banks. Scams have also emerged as a major problem in the banking system.

Recently a large amount of scams were revealed in Punjab National Bank, a large public sector bank of India. Similar scams were reported in Bank of Baroda and other state-run banks. The Reserve Bank of India had to take strict measures against the Punjab National Bank. And his entire board was replaced.

Even those who need a loan from the banking system scams could not get a loan. And the Indian economy also seems to be stuck in trouble due to this. Because if the people who need loan will not get it, then they will have to face difficulties in expanding their business. In particular, small traders and industrialists have to suffer from such problems.

Public attractive promises are increasing burden on banking system

Even if the state is government or the central government does not back down from making ludicrous promises. And the task of fulfilling these luring promises comes on the public sector banks. In such a situation, due to these populist promises on public sector banks, economic burden increases without any meaning.

Be it the Pradhan Mantri Kisan Kalyan Yojana or the pension schemes, the burden of all these schemes is on the public sector banks. Those who are unable to cope now.

In such a situation, the problems of the Indian banking system are going to increase even more if these populist schemes are not stopped soon. Elections are to be held in important states like Bihar and West Bengal in the coming days. In such a situation, the state and the central government can make a public promise. In such a situation, increasing burden on the Indian banking system is believed to be fixed.

The same economy is in trouble due to big schemes like farm loan waiver. It is generally seen that whenever the elections come, political parties promise farmer loan waiver. And it seems to be overshadowing the Indian banking system.

Private banks are also creating problems

There will not be a problem of government bank only for the government. Rather, scams and mismanagement are also seen in private banks.

Yes Bank is a recent example. Recently, Yes Bank had declared itself unable to return customers’ money due to heavy NPAs. After this, the Reserve Bank of India took over its management. After this, state-run banks under SBI had put their money in Yes Bank. And had presented a plan for its revival. At the same time, the Reserve Bank of India took strict steps and changed the management of Yes Bank to a new management.

Apart from this, scams have also surfaced in big banks like ICICI. So it is not that scams are happening only in public sector banks. And only grappling with the problems of the government bank. Rather private banks are also facing problems now. Private banks are also continuously increasing NPAs. So how does the government find a solution to this problem? It will be interesting to see.

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