I cannot say whether it is the highest in the world. But it is quite high by any standards. Reason is that political compulsions and other extraneous factors forced the Indian banks to give away loans to many and that were not recovered thus resulting in the accumulation of huge NPAs.

Yes our banks are amongst the highest NPA's in the world. The most important business implication of the NPAs is that it leads to the credit risk management assuming priority over other aspects of banks functioning. The banks whole machinery would thus be pre-occupied with recovery procedures rather than concentrating on expanding business. A bank with high level of NPAs would be forced to incur carrying costs on a non-income yielding assets.

Other consequences would be reduction in interest income, high level of provisioning, stress on profitability andcapital adequacy, gradual decline in ability to meet steady increase in cost,increased pressure on net interest margin (NIM) thereby reducing competitiveness,steady erosion of capital resources and increased difficulty in augmenting capital resources.

The lesser-appreciated implications are reputational risks arising out of greater disclosures on quantum and movement of NPAs, provisions etc. The non-quantifiable implications can ...more