The Standing Committee on Finance in its recommendations tabled in the Parliament on 24-02-2016 have said that it is alarming that as on September 2015, nearly Rs.6.8 lakh crore worth of bank loans were in the ‘stressed category’ as against Rs.5.91 lakh crore in the previous year.

The Committee has recommended that the PSU banks make public the names of their respective top 30 distressed accounts involving wilful defaulters. This will act as a deterrent and enable banks to withstand pressure and interference from various quarters in dealing with the promoters for recoveries or sanctioning further loans.

The sharpest increase in NPAs (Non Performance Assets) or bad loans in the banking industry was observed in mid size corporates as they rose to 9.7 per cent in September, 2015 from 6.4 per cent in March, 2014. This exposes the aggressive liberal pro corporate policies of the NDA government. At the same time retail loans saw an industry wise reduction to 4.7 percent from 8.8 percent.

The Committee observed that poor pre-sanction due-diligence and diversion of funds to unrelated businesses by the promoters are the key reasons for bank loans become toxic. The committee viewed that the NPA problem has become ‘threatening’ to the stability of the banking system.