RBI Governor Urjit Patel on Saturday attributed the banks grappling with high bad loans to legacy issues saying they are mostly on account of credit facility provided for long-gestation projects before 2011-12. He further said the problem of non-performing assets (NPAs) was earlier also but it is only recently that the issue is being recognised. Patel said that sectors in which bad loans have emerged over the years pertain to long-gestation projects, which were mostly funded before 2011-12.
“Therefore, By definition, this proportionate amount is a legacy issue, although the recognition and reporting of these have taken place only recently,” the RBI Governor said. Finance Minister Arun Jaitley after addressing the RBI board said a legal and executive framework to deal with NPAs has been put in place by the Government as its resolution is an ongoing process. Jaitley also said the bad loans figure has increased owing to emergence of some new NPAs or loans that have been continuing. Congress leader Veerappa Moily had recently raised the bad loans issue in Parliament and said the NPAs figure has grown since 2014.
“I was in Parliament responding to a comment which Moily had made. What was figure in 2014, then 2015, 16, 17 it increased. So I had said these are all loans which have been continuing and what’s have been added is either the discovery of some non-performing assets as a result of some exercise that RBI had directed to be undertaken and also the interest factor has increased,” Jaitley said. After the Asset Quality Review (AQR), there was huge surge in NPA. In the third quarter of the last fiscal alone, NPAs rose over `1-lakh crore.