MoF: GNPA of PSBs Declined from 14.58% in Mar. 2018 to 3.12% in Sept. 24

Current Context: On December 18, 2024, the Ministry of Finance (MoF) reported a significant improvement in the Gross Non-Performing Asset (GNPA) ratio of Public Sector Banks (PSBs).

• The GNPA ratio declined from 14.58% in March 2018 to 3.12% in September 2024.
• This improvement is attributed to the government's 4R strategy:
• Recognition: Identifying and acknowledging NPAs in banks' balance sheets.
• Recapitalisation: Infusing capital into banks to strengthen their financial positions.
• Resolution: Implementing measures to resolve stressed assets.
• Reform: Enacting structural reforms to prevent future NPAs and enhance banking sector efficiency.
• This strategy has helped reduce the burden of bad loans, improving the overall health of public sector banks and contributing to financial stability in the banking sector.

Question:

1 Which strategy did the government implement to improve the GNPA ratio of Public Sector Banks (PSBs)?

• A) 4R strategy
• B) 3R strategy
• C) 5R strategy
• D) 6R strategy

Answer: A) The government implemented the 4R strategy, which includes Recognition, Recapitalisation, Resolution, and Reform, to improve the GNPA ratio.