Reasons of failure to curb NPAs

Economic Affairs Industrial Sickness

Loss recognition : The Asset Quality Review was meant to force banks to recognise the true state of their balance sheets. However banks still continue to evergreen loans
Coordination : The Joint Lenders Forum encouraged by the RBI take decisions by 75% of creditors value and 60 % by numbers. However reaching agreement in these forums has proved difficult.
The S4A scheme recognises large debt reductions will be needed to restore viability in many cases. However the Public Sector Banks are reluctant to grant write-downs, because of lack of incentives. On the contrary major write downs have an inherent threat of punishment and attract investigation.
Under the Indradhanush Scheme, The government has pledged close to 70,000 crore Rupees capital infusion in Public sector Bank by 2018-19, however it is far from Sufficient.
The bulk of the NPA problem is not located in ordinary cases, rather stressed assets are concentrated in a remarkably few borrowers, (a mere 50 companies account for 71 % if the debt owned by IC1 companies). These large debtors have many creditors and so a well defined strategy has to be forged for writing off such loans.

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