New Delhi: Setting a stiff target for all public sector banks, the Finance Ministry has directed them to expedite the recovery process and bring down net NPAs to 1 percent of their total advances by the end of 2013-14 fiscal.
"We have asked banks to bring down their net NPA to 1 percent of the total advances by March 2014," Department of Financial Services Secretary Rajiv Takru said.
Banks are free to choose which ever way they would like to bring down their bad loans. Whether they do it through specialised recovery branch or other method, it is up to the individual banks to decide, he added.
The gross NPAs of public sector banks rose to 4.18 of advances by the end of December 2012, compared to 3.22 percent a year ago. Net NPAs, which are arrived at after making provisions from the gross amount, increased to 2.12 percent in December 2012.
In absolute term, gross NPA of PSU banks jumped to Rs 1,84,193 crore in December 2012 compared to Rs 1,37,102 crore in March 2012, an increase of Rs 47,091 crore in the nine months period.
The gross NPA in corporate lending rose to Rs 98,884 crore in December, as against Rs 68,221 crore in March. In the case of farm loans, the gross NPA rose to Rs 30,800 crore in December as against Rs 24,827 crore in March.
Last month, Finance Minister P Chidambaram had asked banks to take firm steps against affluent promoters to recover loans from sick companies owned by them.
"We cannot have an affluent promoter and a sick company. Promoters must bring in money... We wish banks take firm steps to recover NPAs," he had said.
He had further said recovery has improved in the past one or two months and banks will take more steps to deal with the rising NPAs.
Taking a cue, SBI reduced its gross NPA by 1 percent during the last month.
SBI's gross NPA as a percentage of total loan rose to 5.30 percent at the end of December 2012, from 4.61 percent in the year ago period. The net NPA was at 2.59 percent of loans in the December quarter.