IBC Working Wonders? Last Six Months Witness Dip In NPAs, Says RBI

Reserve Bank of India (RBI), has stated that both the gross and net NPAs (Non-Performing Assets) of scheduled commercial banks have fallen in the last two quarters (April - September 2018), as reported by The Hindu.

Scheduled banks, whether private, public or foreign, are listed under the second schedule of RBI Act, 1934 and are required by law to keep their cash reserves with the RBI. Non-scheduled banks, which are few, do not have such compulsion.

Commenting on the positive role played by the government and RBI to relieve the stress in the banking system, the reported noted, “As a consequence of these measures, the gross NPAs as well as net NPAs of the scheduled commercial banks, after peaking in March 2018, have registered declines for two consecutive quarters.”

While the government has successfully rolled out its flagship legislation, IBC, 2016 (Insolvency and Bankruptcy Code), to help banks recover their dues from defaulters, it has also announced a bank recapitalisation scheme to improve their lending activities.

On the other hand, India’s central bank, the RBI, has enforced stricter norms for NPA classification and put eleven banks under the PCA (Prompt Corrective Action) framework to improve operational efficiency.

The NPA’s in the Indian banking system reached a high of Rs ten lakh crores, earlier this year.

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