In­dian banks’ bad loans soar 86pc in first half

The Pak Banker - - Front Page -


In a wors­en­ing trend of com­pa­nies fail­ing to meet their fi­nan­cial obli­ga­tions, In­dia’s do­mes­tic banks have wit­nessed an in­crease of up to 85 per­cent in their bad loans since the be­gin­ning of the cur­rent fis­cal.

The sharp rise in bad loans for the banks comes at a time when the num­ber of cor­po­rate debt re­struc­tur­ing (CDR) cases has also grown to record-high lev­els.

In the first two quar­ters of the cur­rent fis­cal 2012-13, the banks re­ferred a record num­ber of 74 CDR cases, in­volv­ing a to­tal debt amount of Rs 40,000 crore, for re­struc­tur­ing.

At the same time, at least 35 banks have al­ready re­ported an in­crease in their gross NPAs (Non-Per­form­ing Ad­vances) from the lev­els recorded at the end of last fis­cal, 2011-12, as per an anal­y­sis of the lat­est quar­terly re­sults an­nounced by them. The in­crease in gross NPAs has been as high as 60 per­cent for lenders like PNB, Al­la­habad Bank and Lak­shmi Vi­las Bank, while the surge has been even higher for South In­dian Bank (86 per­cent) in the first half of cur­rent fis­cal.

A few oth­ers like Bank of In­dia, In­dian Over­seas Bank and Cor­po­ra­tion Bank have also seen their bad loans grow by over 50 per­cent in this pe­riod.

Col­lec­tively, these 35 banks have seen their gross NPAs grow by over 28 per­cent or over Rs 32,000 crore in the first half of cur­rent fis­cal, tak­ing their to­tal bad loans to Rs 1.47 lakh crore as on Septem­ber 30, 2012, as per an anal­y­sis of fi­nan­cial re­sults an­nounced by the listed banks for the first two quar­ters of the cur­rent year.

The anal­y­sis does not in­clude the for­eign banks and un­listed do­mes­tic banks, as their fig­ures were not avail­able. In­ci­den­tally, the col­lec­tive gross NPA of these 35 banks at the end of first half of 2012-13 is higher than the to­tal gross NPA at the end of last fis­cal for the en­tire bank­ing sys­tem, in­clud­ing for­eign banks and un­listed do­mes­tic banks. As per In­dian cen­tral bank data, the gross NPA for all the banks to­gether in the coun­try stood at Rs 1.42 lakh crore at March 31, 2012.

In­dia’s Re­serve Bank re­cently said the banks need to strengthen their due dili­gence and credit ap­praisal sys­tem along with over­all mon­i­tor­ing mech­a­nism to con­tain the ris­ing bad as­sets seen in the bank­ing sys­tem.

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