Big borrowers responsible for rising NPA's

New Delhi, June 9 (UNI) Criticising banks and financial institutions for higher non-perfoming assets (NPAs), Rural Development Minister Raghuvansh Prasad Singh today said the financial system lends more to 'affluent' industrial borrowers from whom recovery is difficult against small and micro sector borrowers where recovery is 98 per cent.

''The distribution of the NPAs was skewed in favour of big borrowers, who accounts for the lion's share of the total bad debts,''the minister said in a seminar on NPA management here.

Due to increased NPAs banks are hesitant in providing loans to first generation entreprenuers, small and medium enterprises, households, farmers and NGOs. This is resulting in lower rate of growth in employement and incomes across all sectors, he added.

To improve loan recovery, the minister urged the FIs to study the possible cause of NPAs, a loan for which the interest or the principal or both remain unpaid for two quarters or more. Whether its due to poor corporate governance, mismanagement of funds, lack of risk and disaster management, lack of qualified managerial staff or lack of education of entrepreneurs to handle business operations.

He also added that to promote purpose and succesful entreprenueurship, banking sector can play a critical role by providing credit to entreprenuers for setting up industrial infrastructure, meeting working capital requirements and training.

India has a vast potential in the form of qualified manpower that can make wonders out of junk but lack financial resources for which they have to depend upon Banks and FIs. Thus reducing NPAs through collaborative process and public private partnership can dramatically improve entrepruneurship growth, he added.

UNI