Skip to main content

Gross NPAs of listed banks swell to Rs 5.8 lakh crore

By
The gross non-performing assets (NPAs) of listed banks jumped to Rs 5.81 lakh crore in March from around Rs 3 lakh crore a year ago. Corporate loans dominated the bad loan accounts in FY16, according to data from Capitaline compiled by Business Standard's research bureau.
Analysts and bank executives said the asset quality review (AQR) by the Reserve Bank of India (RBI) across banks in 2015-16 helped get a realistic assessment of stress in the system. This led to a sharp rise in provisions for NPAs, denting bottom line at a time when interest income remained subdued.
Now, banks face the challenge of net NPAs, for which provisions are yet to be made. Vibha Batra, head of financial sector ratings at ICRA, said banks might not see repeat of large-scale slippages like last year. They, however, have a daunting task of making provisions for bad loans in the coming quarters. There is also the risk the agriculture sector showing stress in 2017. Farming activity has been hit due to bad monsoon in the past two years.
According to State Bank of India chairman Arundhati Bhattacharya, the entire impact of AQR they have taken into account. In the third quarter of FY16, there have been slippages of Rs 21,000 crore. Of this, the share of AQR was Rs 14,000 crore. In the fourth quarter, there were slippages of Rs 30,000 crore, with AQR accounting for Rs 9,000 crore.
"As much as Rs 20,000 crore worth of slippages have come from large corporate accounts. This is because several large accounts were not on our AQR list but on other banks AQRs," Bhattacharya said.
Gross NPAs of listed banks swell to Rs 5.8 lakh crore Elaborating on the AQR exercise, S S Mundra, deputy governor of RBI, had said last month that the signs of rising stress in the banking system became increasingly evident in the years beginning 2012.
The stressed assets comprising gross NPAs, restructured standard assets and written-off accounts for the banking system as a whole grew substantially. Stressed assets, 9.8 per cent of the total at the end of March 2012 moved up sharply to 14.5 per cent by December 2015. During the same period, the stressed assets for public-sector banks swelled from 11 per cent to 17.7 per cent. Global economy is passing through a difficult phase and vulnerabilities remain. So, in a globally integrated economy, a general decline in the asset quality was not totally unexpected, Mundra had said.
Business Standard New Delhi, 28th May 2016

Comments

Post a Comment

Popular posts from this blog

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By
  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm
Post a Comment
Read more

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep
Post a Comment
Read more

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

By
  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and
Post a Comment
Read more