DELHI: The economic slowdown seems to have helped push the gross non-performing assets (NPAs), or doubtful loans, of public sector banks (PSBs) to 5.17 per cent of their advances by end-December 2013, against 4.18 per cent a year before.
However, the growth in restructured assets seems to be stabilising, according to the latest Union finance ministry data.
As of December-end, stressed assets, the sum of gross NPAs and restructured advances, was 12.61 per cent of gross advances, compared to 11.02 per cent at end-March 2013.
United Bank of India is under surveillance for NPAs at 10.8 per cent but State Bank of India, the country’s largest lender, is not far behind at 7.1 per cent. State Bank of Mysore’s is 6.5 per cent and Central Bank of India at 6.4 per cent. Only three banks — Vijaya Bank, Canara Bank and Dena Bank — have NPAs of less than three per cent. (STRESSED LOANS SHOOT UP)
If one looks at the total of stressed assets, Central Bank of India had the highest, at 19.75 per cent, followed by UCO Bank and United Bank. Punjab National Bank and Andhra Bank were the others in the top five in terms of this measure.
“NPAs have increased due to the sluggishness of the recent past, the slowdown in recovery in the global economy and continuing uncertainty in global markets,” said an official.
Total NPAs of all banks, including private and foreign ones, increased from 3.69 per cent of the total in December 2012 to 4.47 per cent a year later. At 5.17 per cent, the gross NPAs of PSBs are much higher than the 2.09 per cent of 2008-09. The gains over the years from a high of 17.8 per cent in 1997-98 had been arrested by the global meltdown of 2008.
In the first nine months of this financial year, gross NPAs of PSBs grew faster than restructured advances, with gross NPAs rising from 3.84 per cent in March-end to 5.17 per cent in December. Restructured assets rose from 7.18 per cent to 7.44 per cent.
Rupa Rege-Nitsure, chief economist at Bank of Baroda, said fiscal consolidation was also adding to the stress on banks. Since the government is controlling expenditure, its dues to the corporate sector are held up, which in turn is delaying payments to banks by industries.
“PSBs have a greater share of non-retail loans and are affected more. They have higher exposure to sectors hit by the slowdown,” said Madan Sabnavis, chief economist, CARE Ratings. He said the situation was alarming and banks should set sectoral limits to bring down their NPAs.
Bank of Maharashtra, United Bank of India and State Bank of Travancore saw NPA addition exceeding 200 per cent in the December quarter. State Bank of Patiala, Syndicate Bank, Corporation Bank, State Bank of Hyderabad and Canara Bank added more than 100 per cent.
The highest NPAs, at 7.21 per cent of advances, are in loans to small and medium enterprises, followed by agriculture at 5.99 per cent. NPAs to the corporate sector were 5.28 per cent at the end of December, and 2.74 per cent and 1.83 per cent, respectively, to the retail and real estate segments.
The reduction in NPAs in the December quarter was only Rs 60,426 crore or 28.3 per cent of those in September. This came through Rs 21,988 crore of account upgrades, Rs 18,933 crore of recoveries and Rs 19,505 crore written off. State Bank of Travancore and Vijaya Bank saw the highest reduction at 90.6 per cent and 54.5 per cent, respectively. On the other hand, IDBI Bank, Andhra Bank and Corporation Bank could reduce their NPAs by only 2.9 per cent, 5.5 per cent and 7.9 per cent, respectively.
After a meeting with bankers on Thursday, Finance Minister P Chidambaram said NPAs were also high because the reporting was system-generated. “No NPAs can be hidden in the books, it is important to address the issue and I have told banks to focus on recovery,” he said. NPAs this year, he added, were likely to be higher than last year’s 3.84 per cent.