12.18       ndian     onom
          (i) Indian Banks need to lend 40 per cent        days). This is known as ‘90 day’ overdue norm. For
              to the priority sector every year (public    agriculture loans the period is tied with the period
              sector as well as private sector banks,      of the concerned crops—ranging from two crop
              both) of their total lending. There is a     seasons to one year overdue norm.32
              sub-target also—18 per cent of the total           NPAs were classified into three types:
              lending must go to agriculture and 10 per        (a) Sub-standard: remaining NPAs for less
              cent of the total lending or 25 per cent of             than or equal to 12 months;
              the priority sector lending (whichever be
                                                               (b) Doubtful: remaining NPAs for more
              higher) must be lent out to the weaker
              sections. Other areas of the priority sector            than 12 months; and
              to be covered in the left amount, i.e., 12       (c) Loss assets: where the loss has been
              per cent of the total lending.                          identified by the bank or internal/external
         (ii) Foreign Banks (having less than 20                      auditors or the RBI inspection, but the
              branches) have to fulfil only 32 per cent               amount has not been written off.
              PSL target which has sub-targets for
              the exports (12 per cent) and small and
                                                           recent uPsurge
              medium enterprises (10 per cent). It         During 2017-18, the performance of the
              means they need to disburse other areas of   banking sector, Public Sector Banks (PSBs) in
              the PSL from the remaining 10 per cent       particular, continued to be subdued. The Gross
              of their total lending (lesser burden).      Non-Performing Assets (GNPAs) of Scheduled
          The committee on financial System (CFS,          Commercial Banks (SCBs) increased from 9.6
     1991) had suggested to immediately cut it down        per cent to 10.2 per cent between March 2017
     to 10 per cent for all banks and completely           and September 2017, whereas, their Restructured
     phasing out of this policy for the betterment of the  Standard Assets (RSAs) declined from 2.5 per cent
     banking industry in particular and the economy in     to 2.0 per cent. The Stressed Assets (SAs) rose
     general. The committee also suggested to shuffle      marginally from 12.1 per cent to 12.2 per cent
     the sectors covered under PSL every three years.      during the same period. GNPAs of PSBs increased
     No follow up has been done from the government        from 12.5 per cent to 13.5 per cent between
     except cutting down PSL target for the foreign        March and September 2017. Stressed advances
     banks from 40 per cent to 32 per cent (remaining      ratio of PSBs rose from 15.6 per cent to 16.2 per
     same for those which have less than 20 branches).     cent during the period. Though, various reasons
     Meanwhile, some new areas have been added to          (as reported by the Government documents since
     the PSL.                                              2013-14) have been cited for the recent upsurge
                                                           in the NPAs of the PSBs, by now the major ones
        nPas and stressed assets                           are being considered as given below:33
                                                                (i) Global and domestic macro-economic
     Non-Performing Assets (NPAs) are the bad loans of
                                                                      instabilities due to which a slowdown
     the banks. The criteria to identify such assets have
     been changing over the time. In order to follow         32.   Reserve Bank of India, ‘Master Circular - Income
     international best practices and to ensure greater              ecognition, sset lassification, rovisioning and
                                                                   Other Related Matters’, July 2013.
     transparency, the RBI shifted to the current policy
                                                             33.   As the then RBI Governor Raghuram Rajan said
     in 2004. Under it, a loan is considered NPA if                deposing to the Parliamentary Accounts Committee
     it has not been serviced for one term (i.e., 90               in September 2016.