Top 20 defaulters account for 20% of total bad loans

Reserve Bank of India (RBI) has revealed that the top 20 defaulters of public sector banks account for Rs 2.36 lakh crore, or 20%, of total bad loans in India, though it is yet to reveal their names.

The total bad loans in the Indian banking system are Rs 10.2 lakh crore as of March 31, 2018.

The RBI data, obtained by DNA Money through the Right to Information Act, shows that the loan exposure is highly concentrated, especially in government-controlled banks.

According to the central bank data, top 20 defaulters of public sector banks have Rs 2.36 lakh crore non-performing assets (NPAs), which is about 50% of the total loan exposure of

Rs 4.69 lakh crore to the top 20 borrowers as of fiscal 2018-end.

However, in case of private banks, the defaults by top 20 defaulters are 34% of the loan exposure of Rs 1.31 lakh crore to the top 20 borrowers.

According to Amarjit Chopra, former president of Institute of Chartered Accountants of India (ICAI), the massive concentration of bad loan is the outcome of poor management.

"It reflects poorly on the appraisal system in respect of large projects, particularly infrastructure ones. It may partially be due to other factors like delay in clearances, land acquisition, etc, and to an extent, it may be a reflection on certain undesirable practices in sanction and disbursal of loans," Chopra told DNA Money.

The RBI data shows that in the last three years, due to the huge bad loan pile-up, the PSU banks have become cautious regarding loan exposure to the top 20 borrowers.

In FY2016, public sector banks have raised exposure to the top 20 borrowers by 18%, but reduced it by 10% in FY2017, followed by a 3% increase in FY 2018.

But the private banks have remained robust in their lending to these borrowers. They marked a 13% hike in loan exposure in FY2016 followed by 13% in FY2017 and 21% in FY2018.