As per the latest report tabled during the State Level Bankers’ Committee (SLBC) meeting on Thursday, September 13, Non-Performing Assets (NPAs) in Gujarat have shot up in the past one year, reportedly due to defaults by MSMEs and corporates.
According to an Indian Express report, one year ago, NPAs in Gujarat stood at Rs 31,318 crore. At the end of September 2018, NPAs had shot up by 25 per cent, and now stand at Rs 39,289 crore, i.e., 6.88 per cent of the total loans amounting to Rs 5,60,870 crore.
Ramesh SIngh, executive director of Dena Bank, who headed the SLBC meeting, told IE, “Close to Rs 30,000 crores of NPAs in Gujarat are corporate loans. This also includes all loans over Rs 5 crore taken by MSMEs who fall in the priority-sector for the banks.”
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“In Gujarat, the highest number of defaulters are in the MSME sector. For instance, there is a number of ginning mill loans that have turned NPAs in Rajkot where a number of banks are stuck. If I talk only about Dena Bank then about Rs 200 crore of loans extended to ginning mills have turned into NPAs,” Singh told IE.
“The MSME sector has not been able to come out of demonetisation and GST (Goods and Service Tax). Apart from ginning mills, loans extended to cold storages in Mehsana, textile sector, real-estate and diamond business (loans serviced from Mumbai) have also turned into NPAs in Gujarat,” said bankers, reported IE.
Singh added, “MSMEs are sub-suppliers to larger corporates operating in the textile and infrastructure sectors. So if there is a slowdown among the larger corporates, MSMEs are bound to get affected,”
However, the Vijay Rupani-led Bharatiya Janata Party (BJP) government in Gujarat is reportedly in denial of the issue. As per the government’s recent claim, the MSME sector had registered a year-on-year growth of 11 per cent. Industry bodies like the Gujarat Chamber of Commerce and Industry (GCCI) and Federation of Industries and Associations (FIA) reportedly disagree with the government’s claim and told IE that production in the MSME sector had dipped in the last year-and-a-half.
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