Bad loans at record high of `9.5L crore

Bad loan of banks has touched a record high of Rs 9.53 lakh crore at the end of June quarter, indicating bad debt problems are yet to be under control. An RTI query revealed that banks' total stressed loans including non-performing and restructured or rolled over loans - rose 4.5 per cent in the six months to endJune. In the previous six months they had risen 5.8 per cent. Notably, bad debt problem has eaten into bank profits and adversely impacted fresh lending. This has impacted fund flow to smaller firms, at a time when an economy that depends on them is stalling.

India’s GDP growth has slowed down to three year low of 5.7 per cent in AprilJune quarter and has created concern for the government which faces elections in 2019 and has pledged to create millions of new jobs before then. Meanwhile, banks are having to take higher provisions to account for more defaulters being pushed into bankruptcy and margins are likely to be squeezed further by proposed new rules to encourage commercial banks to pass on central bank interest rate cuts.

Adding to the woes, bulk of India's bad loans are in the state run banks and stem from lending to large conglomerates, especially in steel and infrastructure. Even, bad loans have also shown a spike in SME and retail loan segments.

Apart from loans to steel and infra segments, SME and retail loan segments have also shown rising trend in stress in recent times