New Delhi: Wilful defaults have increased significantly in the last two years even though there has been a dip in bad loans, according to The Indian Express.
RBI’s ‘Report on trends and progress of banking’, released in December 2022 and reported on by The Indian Express on March 15, saw that overall non-performing assets or NPAs have fallen from 7.3% (of total advances) in 2021 to 5% by September 2022. NPAs are loans where the principal amount or interest becomes overdue after 90 days.
Gross NPAs, which also include wilful defaults, had reduced by 19.5% to Rs 6.1 lakh crore as on December 31, 2022 against Rs 7.5 lakh crore over a year ago.
However, wilful defaults themselves have seen a rise of 38.50% or Rs 94,000 crore in the last two years. This, the report says, shows a gap in loan appraisals and risk management among banks and financial institutions.
In an analysis on wilful defaulters, journalist Sucheta Dalal had written that the late K.C. Chakrabarty, former deputy governor of the RBI had said that by the time a bank gets around to declare a company a wilful defaulter, there is nothing much left to recover. Poor assessment before sanctioning loans and lack of monitoring define wilful defaults in India, she wrote.
Quoting Transunion Cibil, a credit information company registered with the RBI, the Indian Express report notes, “There were 15,778 wilful default accounts involving an amount of Rs 340,570 crore as of December 2022 as against 14,206 accounts involving Rs 285,583 crore a year ago in December 2021 and 12,911 accounts for Rs 245,888 crore in December 2020.”
As of December 2022, State Bank of India had 1,883 wilful default accounts for Rs 79,296 crore, followed by PNB at Rs 38,360 crore, Union Bank of India Rs 35,266 crore, IDBI Bank Rs 23,601 crore and Bank of Baroda Rs 23,879 crore, the report said, quoting the Cibil website.