Indian Banking System Suffering from NPAs

Retail Investors debts are recovered through auction of collateral but when it comes to corporate debt,    much of which is given on basis of future performance and those with politcal backgrounds without assets, recovery is real hard. The companies declare bankruptcy and banks are forced to write them off. Genuine companies do have assets and banks make some recovery of it. 

Banks show reduction in NPAs to general public while the truth remains in fine print that reduction is due to writefoffs. Gross NPAs in macro level result  even stricter standards in retail lending despite their promptness in paying loans. During times of slowdown, those who can create jobs are denied credit by banks despite having brilliant innovative plans.Just 20 Top Borrowers get more credit than entire MSMES in India. 

RBI in Dec.2019 said that NPAs will rise since all NPAs have still not been identified and hence projected NPAs to grow to 9.9 percent as part of advances from current 9.3%. RBI Data shows that banks held around Rs 13,53,133 crores in bad loans. They recovered 1,70,711 Cr & wrote off 2,36,948 crores making balance as 9,36,474 cr rs at end of Dec.31,2019. 

Corporates take huge loans,declare inability to clear loan and banks settle with partial recovery with even interest exemptions. Several lakh entrepeneurs have cheated the system thus regularly. The ones that are written off are mostly done under immense political pressure. Banks are showing artificial growth by writing off 1,627,000 crores in 2018 and 236948 crores in 2019. As long as banks keep giving credit without collateral, these kind of stressful situations will keep arising.