Concern – Rising NPA

This problem is indeed for all countries because this is also one of the phase to list down each country into the developed economy list. During the developing phase, banks are crazy to pumped more money into the market to get good amount of market share, which results into more NPA with the growth as well. Our economy is also facing this problem at this moment. NPA of most of the PSU banks are rising. Gross NPA stood at 4% in Sep 2012 and, Gross NPA of PSU banks rised by 0.98% in Sep 2012.

Our FM realized that, our PSU banks require 15K crore to come out from this NPA concern because recently, RBI raised provision limit for the banks and which hurted most of the PSU bank. Some of them are Indian overseas bank, Cenral bank of India and Bank of Maharastra.

There is another solution as well, banks have to reduce the interest rate on lending and this can be possible only when govt permits banking licence and more competitors come into the market to beat one another through competitive lending. I think, this move has to come sooner or later to move our country into the developed economy list.