Rising NPAs put banks in a tight spot

The banking system as a whole has been witnessing higher level of non-performing assets (NPA). With restructured loans turning bad, the problems of the industry have only compounded.

State-run banks continue to report higher bad loans and the gross non-performing assets as on March 31, 2015, stood at 5.17 per cent. The stressed assets ratio (which includes NPAs and restructured loans) was 13.2 per cent, according to RBI data.

At the annual review meeting of the Union Finance Minister with the CEOs of banks (including private banks), insurance companies and financial institutions (FIs) held on June 12 in New Delhi concerns were raised over the increase in non-performing assets which were impacting credit growth of banks.

The rise was due to some infrastructure projects, slowdown in global economic recovery, and continuing uncertainty in global markets leading to lower growth of credit. It was stated that public sector banks continued to be under stress on account of their past lending.

Going through the details of annual financial results of public and private sector banks (including old private banks) for 2014-15, it may be noted that the gross non-performing assets (GNPA) of 26 public sector banks (including 19 nationalised banks, State Bank of India and its associates and IDBI) have risen by 22.5 per cent to Rs.2.78 lakh crore against Rs.2.27 lakh crore in the previous financial year. While the 19 nationalised banks have registered a rise of 39.8 per cent in gross NPA at Rs.1,92,270 crore against Rs.1,37,487 crore in the previous financial year, State Bank of India and its associates have reported eight per cent drop in their NPAs at Rs.73,508 crore against Rs.79,818 crore.

Private sector banks

The details of new private sector banks — consisting of Axis Bank, DCB Bank (Development Credit Bank), HDFC Bank, ICICI Bank, Kotak Mahindra Bank and Yes Bank — present a different picture. Their gross NPA has risen by 35.3 per cent to Rs.24,534 crore in 2014-15 from Rs.18,133 crore in the previous financial year.

In this segment, ICICI Bank, with 43.7 per cent rise in gross NPA at Rs.15,095 crore against Rs.10,506 crore, contributes to the maximum followed by DCB Bank (Development Credit Bank) at 33.8 per cent (the increase is on a lower base).

Old private sector banks

The gross NPAs of eight old private sector banks (listed on stock exchanges) and Tamilnad Mercantile Bank put together shows a rise of 50 per cent at Rs.7,755 crore against Rs.5,170 crore in 2013-14. Jammu & Kashmir Bank tops the list with a sharp rise of 253 per cent at Rs.2,764 crore against only Rs.783 crore, followed by Karur Vysya Bank with 143 per cent rise at Rs.678 crore (Rs.279 crore) and South Indian Bank (48.5 per cent). Tamilnad Mercantile Bank has shown a reduction in NPA to 318.68 crore from Rs. 428 crore. Lakshmi Vilas Bank has reduced its NPA significantly to Rs.455 crore from Rs.546 crore, followed by Federal Bank to Rs.1,058 crore from Rs.1,087 crore.

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Printable version | Nov 26, 2021 11:16:24 PM |

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