The 20 % reported drop in profits from Punjab National Bank has returned the spotlight to the issue of bad loans in India , as its banking sector struggles under $ 100bn of stressed loans , which is in turn impacting economic growth . Although state - run banks , who account for 80 % of all outstanding bank loans , have borne the brunt , private lenders such as Axis Bank have also been hit . India 's banks have been struggling with asset quality issues for months however the recent hike in bad loans has been attributed to the Reserve Bank of India 's rule that banks treat some stressed borrowers as non - performing even if they have not yet defaulted . The banks have been asked to make required provisions during the third and fourth quarters of this fiscal year ending in March. A large proportion of the loans being written off are from the steel and power sectors .
The 20 % reported drop in profits from Punjab National Bank has returned the spotlight to the issue of bad loans in India , as its banking sector struggles under $ 100bn of stressed loans , which is in turn impacting economic growth . Although state - run banks , who account for 80 % of all outstanding bank loans , have borne the brunt , private lenders such as Axis Bank have also been hit . India 's banks have been struggling with asset quality issues for months however the recent hike in bad loans has been attributed to the Reserve Bank of India 's rule that banks treat some stressed borrowers as non - performing even if they have not yet defaulted . A large proportion of the loans being written off are from the steel and power sectors .