UPSC CSE Mains Syllabus: GS-3- Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Non-Performing Assets – Way Forward For Banks

Supreme Court decision on NPA:

Issues with the decision:

Other issues faced by the bank:

Already, banks are so reluctant to lend they are content to leave funds lying with RBI for a paltry 3.35% or park them in government bonds at 5.8-6%. Taxpayers are still paying for the loan losses for the banking system, which at one point had crossed 12% of assets. Today, with the economy contracting and the IBC suspended, banks are becoming increasingly vulnerable to large loan losses.

Source: “Financial Express”.

Possible UPSC Mains Question:

What are the issues of high NPA’s in banking sector? Critically examine the recent decision of the Supreme Court asking banks to not classify stressed accounts of borrowers as non-performing assets (NPAs).