Archive · 29 Jun 2025
PSBs Develop New NPA Recovery Framework, Pushed by Finance Ministry
Imagine banks have some loans that people can't pay back, called bad loans.
The government wants these loans to be fixed quickly.
So, banks are making special teams to deal with the biggest bad loans, over 100 crore rupees.
For smaller bad loans that are hard to get back, banks might just write them off.
They're also changing their legal teams.
Banks' bad loans have gone down, which is good news.
Experts say sorting bad loans by how much money is owed will help banks get their money back faster and better.
Public sector banks (PSBs) are developing a new framework for Non-Performing Asset (NPA) recovery.
The finance ministry is pushing for specialized teams and potentially writing off small, difficult-to-recover loans.
PSBs are asked to restructure legal teams and reassess top stressed assets under high-level supervision.
The move follows a decline in PSBs' net NPAs to a multi-year low and rising net profits.
Experts suggest segregating stressed assets by value to improve focus and efficiency.
- Who
- Public Sector Banks (PSBs) are implementing the changes, pushed by the finance ministry.
- What
- PSBs are creating a new framework to recover bad loans, including specialized teams and potential write-offs.
- When
- The new framework is being developed now, following the end of the financial year on March 31.
- Where
- This is happening across public sector banks in India.
- Why
- To continue the trend of reducing bad loans, and to improve recovery efficiency.
Experts
Lenders
Effectiveness of the New Approach
Experts
Specialized teams and value-based segregation would improve operational focus.
Lenders
Lenders need to ensure lower-value delinquencies do not become business-as-usual.
- NPA Threshold
- ₹100 crore and above
- Net NPA (PSBs)
- 0.52%
- Net Profits (PSBs)
- ₹1.78 trillion
- Gross NPA (Banking Sector, March)
- ₹4.16 trillion
- Gross NPA (PSBs, March)
- ₹2.94 trillion
- Fresh Slippages (FY24)
- 7.8%