Bank credit increased by 9.16 per cent to Rs 116.83 lakh crore in the fortnight ended December 31, 2021 and deposits increased by 10.28 per cent to Rs 162.41 lakh crore.
There has been a steep decline in recovery.
Credit of banks in the Corona period (bank credit) has seen a huge jump. Along with credit, there has also been an increase in the deposited capital i.e. deposits. Bank credit increased by 9.16 per cent to Rs 116.83 lakh crore in the fortnight ended December 31, 2021 and deposits increased by 10.28 per cent to Rs 162.41 lakh crore. This was revealed from the Reserve Bank of India’s data for the fortnight ended December 31, 2021, released on Friday regarding scheduled bank loans and deposits. In the fortnight ending January 1, 2021, bank loans stood at Rs 107.02 lakh crore and deposits at Rs 147.26 lakh crore. Earlier, in the fortnight ending December 17, 2021, there was a growth of 7.27 per cent in bank advances and 9.58 per cent in deposits. In the financial year 2020-21, there was an increase of 5.56 per cent in bank loans and 11.4 per cent in deposits.
Talking about the banking sector in the last few years, the recovery has been less, although there has been a jump in write-offs. When banks are unable to recover the loan from their customers, then that amount goes into Non-Performing Assets (NPA). When the NPAs of the banks become very high, they write off this amount of NPA, that is, write off. A report of RBI has come out on this write-off of banks, which is shocking.
Rs 9.54 lakh crore bad loan write-off done
According to this report, commercial banks in India have written off bad loans worth Rs 9.54 lakh crore in the last five years. Public sector banks have been at the forefront in writing off bad loans. Out of 9.54 lakh crore, more than Rs 7 lakh crore has been written off by public sector banks.
Recovery of only Rs 4.14 lakh crore
This amount written off by banks is more than double the amount recovered by them during this period. According to RBI data, the amount recovered by banks through Lok Adalats, Debt Recovery Tribunals and IBC etc. in the last five years was only Rs 4.14 lakh crore. Write off is a major reason due to which the NPAs of banks come down.
Gross NPAs coming down due to jump in write-offs
The gross NPA of banks was 11.8 percent in March 2018, which came down to 7.3 percent in March 2021. RBI says that this figure can come to 6.9 percent by September 2021, which will be the lowest in 5 years. The amount written off by banks in the last 5 years was less than 5 per cent of their total assets as on March 31, 2021.
Balance sheet is improving on paper
Meanwhile, Rajkiran Rai, Managing Director and CEO of Union Bank of India, had said recently that due to consolidation, the financial condition of banks on paper has improved from the pre-Corona era. In a special conversation with the Times of India, he had said that the balance sheet of banks has improved in 2021. The trouble had increased in the months of April and May due to the second wave of Corona. Whether it is asset quality, stress or collection, banks are currently in a better position.
Consolidation of public sector banks is happening
Regarding public sector banks, he said that the consolidation of public sector banks is taking place for the last few years. The balance sheet is improving, the issue of bad loans is being taken seriously, provisioning is important and capital raising is also going on from time to time. Apart from this, consolidation of banks is also going on. I believe that by the end of FY 2021-22, we will grow along with the industry. In the next financial year, we will grow faster than the industry.