The case discusses the issue of high NPAs in the Indian banking system in the first two decades of the twenty-first century. It covers in detail the various steps taken by the central bank of India and the Government of India to bring down the NPAs and how gross NPAs went down by rupees one trillion in the financial year 2019 when compared with the previous financial year. Although the GNPAs had gone down by close to rupees one trillion in FY19, bad loans were still very high. Some experts opined that the high number of bad loans would continue as long as the Public Sector Banks remained under the shadow of the government. They commented that the RBI and the GoI should take more stringent steps to clean up the balance sheet of the banks.

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Issues

The case is structured to achieve the following teaching objectives:

	Analyze the Indian banking system and understand how it developed over a period of time.
	Understand the NPA problem in the Indian banking system.
	Critically analyze the initiatives taken by the RBI, the GoI, and SEBI, to address the issue of high NPAs.
	Understand what steps stakeholders should take to solve the issue of high NPAs in the Indian Banking Industry.

Contents

INTRODUCTION

INDIAN BANKING INDUSTRY

NPAS IN INDIAN BANKING INDUSTRY

REASONS FOR HIGH GROWTH IN NPAS

RBI’S POLICIES ON NPAS

SEBI’S CIRCULAR ON DISCLOSURE OF DIVERGENCE

EFFORTS OF GOI TO REDUCE NPAS

LOOKING AHEAD

EXHIBITS

Keywords

NPA, RBI, Asset Quality Review, Non-Performing Assets, Willful defaulters, Strategic Debt Restructuring, Divergence Disclosure Rules, Prudential Framework for Resolution of Stressed Assets, Insolvency and Bankruptcy Code, Project Sashakt, 4Rs strategy

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