Non-Performing Assets in Tripura Skyrocket to 21%. SLBC cites irregularities in KCC-linked loans as a key factor, affecting small farmers and banks alike.
A recent report by the State Level Bankers’ Committee (SLBC) in Tripura has raised serious red flags about the worsening condition of the banking sector in the state, particularly due to a steep rise in Non-Performing Assets (NPAs). As per the latest data, the overall proportion of NPAs across all loan accounts in Tripura has reached 21%, creating significant concern among financial experts, regulators, and lending institutions.
Major Banks Face Alarming NPA Levels
The report outlines that several public sector banks are facing especially high levels of bad loans. The State Bank of India (SBI) recorded the highest NPA rate in the state, with an alarming 50% of its loans categorized as non-performing. Other major banks followed suit:
- Punjab National Bank: 44%
- UCO Bank: 40%
- Canara Bank: 30%
- IDBI Bank: 24%
Even though a few banks showed comparatively lower percentages, the numbers remain concerning. For instance:
- Indian Overseas Bank reported 17%
- Central Bank of India and Indian Bank each stood at 11%
Several other institutions, including Bank of Baroda, Union Bank of India, Tripura Gramin Bank, HDFC Bank, Tripura State Cooperative Bank (TSCB), and Punjab & Sind Bank, also reported sizable volumes of non-performing loans, although detailed figures for these were not specified in the report.
Impact on Lending and Economic Activity
The rise in NPAs poses a serious threat to the financial ecosystem in Tripura. Experts point out that such a trend weakens banks’ ability to extend fresh credit, especially to priority sectors like agriculture and small businesses. The resulting credit crunch can significantly hamper development and economic progress across the state.
According to banking officials, one of the core reasons behind the surge in bad loans is poor documentation, particularly in loans linked to the Kisan Credit Card (KCC) scheme. Many farmers have reportedly received lower-than-expected loan amounts due to flawed assessments and structural irregularities in the loan approval process. This has adversely affected their ability to repay, especially in the absence of proper financial guidance or support.
A senior official from Tripura’s regional rural banking sector noted, “Several KCC-linked loans were sanctioned without proper financial structuring. As a result, the farmers ended up getting less than they needed, which compromised both the effectiveness of the scheme and their repayment capacity. These lapses reflect a lack of accountability in the system.”
Voices from Academia: Need for a Strategic Approach
Kiran Bhowmik, Research Associate at the Department of Economics, Tripura University, and affiliated with the 16th Finance Commission, highlighted the broader implications of rising NPAs on rural livelihoods. “The increasing NPA levels not only affect banks but hit small and marginal farmers the hardest. These farmers depend heavily on schemes like the KCC to sustain their agricultural operations. When such loans fail, it impacts entire communities,” Bhowmik said.
He stressed the need for a well-rounded and practical strategy to tackle the crisis. His proposed action plan includes:
- Pre-disbursement surveys using standard evaluation tools to accurately assess borrower needs and repayment potential.
- Post-disbursement monitoring to track the utilization of funds and catch early warning signs of default.
- Shielding the loan sanctioning process from political pressure, especially in the selection of KCC beneficiaries.
- Ensuring strict compliance with the scale of finance to avoid both over- and under-financing.
Call for Institutional Intervention
With the situation escalating, there is a growing chorus of voices urging regulatory authorities such as the Reserve Bank of India (RBI) and NABARD to step in with corrective measures. State-level coordination between banks, financial regulators, and the government is seen as vital for cleaning up the NPA mess and restoring public confidence in the financial system.
Experts agree that unless immediate and coordinated steps are taken, the banking sector in Tripura could face prolonged distress — a scenario that would deeply impact both institutional lenders and vulnerable borrowers across the state.
