• To guard against a further increase in bad loans, banks are planning to dig deeper when it comes to loan appraisals by tapping the database of the Income-Tax and GST departments.
• This move is expected to not only minimize the chances of their falling victims to frauds and of loans turning bad, but is seen as making loan appraisals more foolproof and enabling loan decisions to be conveyed faster.
• Currently, banks are able to tap into only the database of the Ministry of Corporate Affairs to get information on forms, returns and documents (including net worth, shareholding and ownership pattern, detailed financial statements – balance sheet and profit & loss accounts, prospectus, memorandum of agreement, articles of association) filed by companies. This information helps banks evaluate loan proposals by companies.
• That banks are grappling with a huge pile of bad loans is underscored by the fact that the aggregate gross non-performing assets of scheduled commercial banks increased from ₹3,23,464 crore, as on March-end 2015, to ₹10,35,528 crore, as on March-end 2018.
• Banks are also under pressure to tackle frauds. According to RBI data, banks reported 5,897 cases of frauds aggregating ₹ 32, 048.65 crores in 2017-18.