Mazdoor Ekta Lehar interviewed Comrade Vishwas Utagi, Vice President of All India Bank Employees Association(AIBEA), on the rising bad loans or Non performing Assets of the Public Sector Banks(PSB)
Mazdoor Ekta Lehar (MEL): What is a Non Performing Asset(NPA)?
Comrade Vishwas Utagi (VU): The people of India put their money in the PSB’s. They get interest on this money. The same money is lend by the banks for commercial purposes. The bank makes its profit by lending to commercial borrowers at a higher interest rate than it gives its depositors(the people of India). The major commercial borrowers are the big industrialists who borrow this money and set up their industries. It is to be noted that the majority of industrialists do not set up their industries with their own money but with the money borrowed from banks. A part of the profits of these industrialists is used to pay back interest charged by the banks. When a company refuses to pay back the money that it has borrowed, that loan is called a bad loan or Non Performing Asset (NPA). The banks also lend to the Governments both Central and State Governments.
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