Worst of...
To be sure, the share of NPAS in total advances is still much higher than what it was before the RBI forced banks to implement Asset Quality Review (AQR) in December 2015. The AQR is believed to have put an end to the practice of making additional provisions to what were already stressed loans.
The Indian economy has been suffering from a vicious cycle of low demand and supply for capital due to the NPA crisis. Banks were unable to lend because their capital was caught in bad loans. And firms were unwilling to borrow because of an already existing loan burden. The Economic Survey had termed this as the “twin balance sheet” problem a couple of years ago.
The latest numbers on decline in share of NPAS, when read together with capital formation and credit growth statistics, which are already available in the public realm, also point towards a cyclical revival of the investment cycle in the Indian economy. Both these indicators show a revival in the recent period, which suggests that there is a revival in investment demand in the economy.
See Chart 2: Non-food Bank Credit and GFCF Growth and % of GFCF in GDP
While these developments are good news on the macro front from a growth perspective, they could also mean a tightening of the inflation scenario. Given the fact that non-food inflation in the economy has been consistently high, it could build the case for a hike in lending rates by RBI in the near future. Subodh Kumar Singh, who was part of the initial investigation into the 2015 murder of Mohammad Akhlaq in Dadri over allegations of cow slaughter, and a man identified as Sumit died. Singh was first injured in the stone pelting by the mob and was shot later. Sumit, who was shot dead, belonged to the mob.
The list of 28 accused in the violence include, other than Raj, the names of BJP Syana unit youth wing president Shikhar Agarwal and VHP ex-syana president Upendra Raghav. Syana is a hamlet near Bulandshahr. Raj’s video also raised doubts about an FIR filed by him over cow slaughter charges that named seven people. Two boys – aged 10 and 11 – were named in the complaint and locals said two others named either didn’t live there or were at the Islamic congregation on the day of the alleged slaughter. In the evening, police said the 11-year-old boy’s name had been withdrawn.
(with agency inputs)