Earlier in January, when the RBI released its FSR report, the estimate was around 13.5% till September 2021, which will remain at a 22-year high.
New Delhi: There is a big saying that the bigger the bed sheet, the more one should spread, that is, one should think of spending only after looking at his pocket. But while taking a loan from the bank, many people do not know how to repay it, due to many of these circumstances, many willfully do not want to repay the loan, due to which the condition of the bank becomes bad.
Now imagine, if only the banks that breathe life into the economy start falling ill, then what will happen to the people, after all, what is the financial condition of the banks today? How much and why are NPAs increasing? What will happen to your deposits if the bank sinks? There are many such questions that trouble people, let’s try to know the answers to these questions.
How much can banks’ NPAs increase in 2022?
The Reserve Bank of India estimates that by March 2022, the NPA (Non Performing Asset) of banks is going to increase significantly and it can be up to 9.8% and in case of high pressure it can go up to 11.22%. Whereas in March 2021 i.e. in the last financial year it was 7.48%.
Earlier in January, when the RBI released its FSR report, the estimate was around 13.5% till September 2021, which will remain at a 22-year high. The report says that public sector banks ie public sector banks can suffer the most in this. Whose Gross NPA which was 9.54% in March 2021 may increase to 12.52% in March 2022. While the gross NPA of private sector banks can be up to 6.46%.
However, according to RBI, banks will have enough capital that they can deal with this loss. NPA is a loan or loan from which the bank stops getting returns, according to the rule, if the EMI principal or interest of a loan does not come within 90 days of the due date, then it is put in NPA, it can also be called bad loan. Huh .
How many people dabbled in debt, how much money was written off?
The biggest problem in front of banks is loan recovery, especially willful defaulters i.e. withdrawing money from people who deliberately do not repay the loan. The number of such people has increased from 2208 to 2,494 by 31 March 2021. The numbers have been increasing in the last 3 years, where the number was 2,017 on 31 March 2019.
At the same time, it increased to 2,208 on 31 March 2020 and 2,494 on 31 March 2021. If we talk about the amount written off, then during the financial year 2020-21, Rs 1,31,894 crore was written off. In the previous financial year, this figure was Rs 1,75,876 crore. Banks write off the same loan where they do not expect to get any value of the loan, then legal process is started for its recovery.
How much has been recovered from the fugitives so far?
The question is, why should someone fill this? Big fish run away by defrauding the banks, the loss is borne by the common man, but now the process of recovery from them has also started.
According to the ED, the banks suffered a loss of Rs 22585.83 crore due to the three fugitive businessmen, of which 80 per cent of their assets have been seized and recovered. The ED has also transferred Rs 9371.17 crore out of the total seized assets to public sector banks.
How do banks profit even in adverse circumstances?
Despite the NPA, the banks have made profits, the country’s largest state-run bank SBI has made a profit of more than 6 thousand crores in the first quarter of this financial year. After this news, the stock of the bank was seen touching an all-time high during the trading in the stock market. The profit of the bank has increased by 55.3 percent. The profit in the same quarter last year was Rs 4,189 crore, which has now reached the level of Rs 6,504 crore.
At the same time, Bank of Baroda, the second largest public sector bank, has made a profit of 1208 crores in the June quarter, while the bank had a loss of 864 crores in the same quarter a year ago. has come. Banks have increased profits due to the fall in NPAs. According to RBI, during the last 3 financial years, public sector banks have also recovered Rs 3,12,987 crore out of bad and written off loans.
What are the side effects of the deteriorating health of banks on the common man?
If the health of banks deteriorates, it directly affects the common man. A fundamental principle of economics is that depositors should get 2 percent more interest from banks than inflation. But the current situation is quite the opposite. Currently, interest rates on deposits are at historically low levels. The country’s largest bank is giving only 2.70 percent interest on SBI savings account, while the inflation rate is above 6 percent. Their main source of income has been disturbed due to the decrease in the demand for loans from banks.
In such a situation, banks are putting the burden on the common customers. We have started taking steps like withdrawing money from ATMs, removing the free facility for depositing money in the branch and withdrawing money. SBI is offering its Basic Savings Account holders the facility of 4 ATM withdrawals in a month and 4 free branch transactions only. After that, every transaction will charge Rs 15-75. The customer will also have to pay GST on the same.
How will you get your money if the bank sinks?
Banks are at risk of sinking due to rising NPAs, due to which customers are worried about their deposits, but the government has tried to reduce the concerns of the people, the important bill 2021 related to fixed deposits (DICGC) has been passed, according to which banks Customers have got a guarantee of return of capital up to 5 lakhs within 90 days in case of sinking.
Deposit Insurance and Credit Guarantee Corporation (DICGC) is a subsidiary of Reserve Bank of India and it provides insurance cover on bank deposits, earlier this sum insured was only Rs 1 lakh, but the Modi government has increased it to 5 lakh only last year. . Account holders of 23 co-operative banks will benefit from this bill. These 23 banks are such that are in a state of crisis at the moment and some restrictions have been imposed on them by the Reserve Bank of India.
The condition of PMC and Yes Bank had increased the concern
the way many banks reached the verge of sinking in the last one or two years, people’s confidence in the banking system has started to shake. We have all seen the crisis of Lakshmi Vilas Bank, Punjab-Maharashtra Cooperative Bank (PMC), Yes Bank. How the customers of PMC Bank were wandering from door to door for their money while crying.
Recently, RBI has accepted in principle the proposal of Central Financial Services and Bharat-pay in which both will take over PMC Bank and start it as a small finance bank. A similar case of Yes Bank came to light in March 2020, when the RBI had to impose a moratorium on the bank. His customers could not withdraw money on their own for a few days .
The biggest concern and challenge before the banks is to rein in the willful defaulters because they are harming the banking system like termites. More strict steps need to be taken in future.
