DS

Dr. Sachin B L· 2023

Question 7GS3GS1

Rising NPAs coupled with twin balance sheet issues have been the most pressing problem of India's economy in recent times. What are the factors responsible for rising NPAs? Elaborate on the measures that can be undertaken to address this problem giving special reference to the potential of newly formed NBFC1 and IDRCL. (Answer in 250 words) 15 marks

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AnswerStrengthsGapsKeywords

Introduction

Non Performing Assets (NPAs), commonly referred to as a bad loan, ratio to loans that are i) in default → debtor unable to meet repayment obligations ii) in arrears → when principal or interest payments are missed

37 words

Main Body

Bank lend loans → Private sector poor performance → Inability to pay a bad loan. With failure that problem of twin balance sheet which comprises both bank & private sector. Factors responsible for rising NPAs: 1) Continued poor performance of certain sectors due to V-shaped recovery (G) Sector like power construction, real estate still under pressure there.

— Dr. Sachin B L

57 words1 paragraphs

Diagram

Flow diagram showing: Bank lend loans → Private sector poor performance → Inability to pay a bad loan. Also shows 'Twin balance sheet problem of both banks & private sector' and 'Loss of revenue for banks'

Answer continues on next page
  • Clear definition of NPA with two components
  • Identification of specific stressed sectors (power, construction, real estate)
  • Flow diagram illustrating the problem cycle
  • Links to V-shaped recovery concept

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Page 10

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Topper

Dr. Sachin B L

2023

Subject & Paper

GS3GS1

Topic

Banking and Finance

Non-Performing Assets (NPAs)

NPA Management and Twin Balance Sheet

Writing Stats

94

Total words

1

Paragraphs

Technical and financial

Tone

Linked PYQ

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