SBI's NPA on currency loans rises by 23% despite government concessions

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MUMBAI: Despite the government's announcement of relief, the country's largest bank, State Bank of India (SBI), has seen a 6 per cent increase in currency loan (small ticket size) NPAs in the fiscal year 2020-21.

According to experts, the NPA of these loans was not likely to increase in the proposed period. This is because for this type of loan, the government also provided loan moratorium, loan restructuring as well as additional loan facility for working capital under the government's guarantee scheme. Even so, the NPAs of these loans have increased. Currency loans are business loans given to small businesses.

This type of loan has seen an increase in NPAs over the last few years. If the NPAs of currency loans issued by the country's largest bank have increased, then it is natural that the NPAs of currency loans of other government banks may have increased. Banks have no option but to provide more losses in currency loans.

In the book of State Bank in 2030-21, a total of Rs. 500 crore gross NPA with currency loan outstanding Rs. 206 crore. According to experts, the NPAs of currency loans are higher than the NPAs of agricultural loans and MSME loans. Despite the increase in NPAs on currency loans, banks have not put a brake on it. Only through State Bank of Rs. More than Rs 2,000 crore loan has been sanctioned.

Under this scheme maximum Rs. Loans up to Rs 10 lakh are available. However, by a committee appointed by the Reserve Bank, the limit has been raised to Rs. 10 lakh to Rs. 20 lakh was proposed. However, experts say the entire scheme should be redesigned instead of raising the limit.

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