Banks are asked to Check Rise in Bad Loans

By Pradeep Yuvaraj | June 16, 2011

A recent press report said that Finance Minister, Mr. Pranab Mukherjee, has asked public sector banks (PSBs) to apply due diligence in sanctioning of new loans.

Reports said that the gross NPA level in the banking system has gone up from Rs 59,927 crore as on March 31, 2010 to Rs 74,617 crore as on March 31, 2011.

Mr. Mukherjee told the press that the chiefs of public sector banks were advised to apply due diligence for fresh sanction of loans, but also ensure a mechanism through which this growth of NPAs is arrested and there is no further enhancement of NPAs.

Reports said that the finance minister pointed to the moderation in credit growth in the last quarter even as he congratulated the bank chiefs for the significant credit growth of 22.44 per cent recorded by PSBs in 2010-11. He said that he was happy about the rise in the number of education loan accounts, which had more than doubled in the last five years. He also said that the outstanding loan amount has more than tripled in the same period.

Mr. Mukherjee said that delay in sanction and disbursement of educational loan must be avoided. He said that model scheme being revised by the Indian Banks Association (IBA) in consultation with the Finance Ministry should provide for time-bound disposal of applications and effective grievance redressal system.

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Pradeep Yuvaraj

About Pradeep Yuvaraj

Pradeep Yuvaraj is a Co-Founder and Director at Finerva Financial Solutions Private Limited, a financial education company focused on personal finance education. He has penned over 250 articles relating to Personal Finance and clocked over 500 hours of educating individuals on managing personal finance. He is a serial entrepreneur and has been associated with 7 Start-ups. His entrepreneurial experience spans industries as varied as Education, Gas Engineering, Automobile Design, Software development and more recently a Pure play presentation design company. Prior to turning entrepreneur in 2005, he has worked for 3 of the top ten companies of the world - Shell, ExxonMobil and Total SA. This experience included handling Branch Operations, Channel Sales and Business Development across 5 states over a period of 8 years. He holds an MBA from Symbiosis and an Electronics Engineering Degree from the University of Pune.

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