There was a 50 per cent rise in banks' doubtful assets - loans unpaid for 18 months - to Rs 90,000 crore at end-March 2013 from Rs 61,700 crore a year before.
The Reserve Bank of India's report on trends and progress in banking (2012-13) said there were signs of a deepening deterioration within non-performing assets (NPAs), with an increase in the proportion of doubtful loan assets.
The increased shift of loan assets towards the 'doubtful' category was most prominent for the State Bank of India (SBI) group and among nationalised banks, RBI said.
Vibha Batra, senior vice-president at rating agency Icra, said with the sharp economic slowdown and liquidity strain, the shift to the doubtful category was obvious.
The gross NPA ratio at the aggregate level was 3.6 per cent (of the total) at end-March, up from 3.1 per cent at end-March 2012. In the SBI group, this reached five per cent at end-March this year. The average for nationalised banks at end-March was 3.6 per cent.
The asset quality of banks is an important indicator of their financial health. It also reflects the efficacy of their credit risk management and recovery environment, RBI said.
The asset quality of the banking system deteriorated significantly during 2012-13 and there was an increase in the total of stressed assets (NPAs plus restructured assets) in the banking system. Banks must follow the directions of RBI and the government for resolution and recovery of bad loans, said the central bank. Beside strengthening their due-diligence process, credit appraisal and post-sanction loan monitoring systems, RBI added.
The Reserve Bank of India's report on trends and progress in banking (2012-13) said there were signs of a deepening deterioration within non-performing assets (NPAs), with an increase in the proportion of doubtful loan assets.
The increased shift of loan assets towards the 'doubtful' category was most prominent for the State Bank of India (SBI) group and among nationalised banks, RBI said.
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Loans which remain unpaid for 90 days (three quarters) are termed sub-standard. If for 18 months, such accounts are termed 'doubtful'. This category of NPAs work as a drag on banks in two ways. One, they have to make much higher provisioning (around 50 per cent of the exposure). Two, the prospects for recovery are low.
Vibha Batra, senior vice-president at rating agency Icra, said with the sharp economic slowdown and liquidity strain, the shift to the doubtful category was obvious.
The gross NPA ratio at the aggregate level was 3.6 per cent (of the total) at end-March, up from 3.1 per cent at end-March 2012. In the SBI group, this reached five per cent at end-March this year. The average for nationalised banks at end-March was 3.6 per cent.
The asset quality of banks is an important indicator of their financial health. It also reflects the efficacy of their credit risk management and recovery environment, RBI said.
The asset quality of the banking system deteriorated significantly during 2012-13 and there was an increase in the total of stressed assets (NPAs plus restructured assets) in the banking system. Banks must follow the directions of RBI and the government for resolution and recovery of bad loans, said the central bank. Beside strengthening their due-diligence process, credit appraisal and post-sanction loan monitoring systems, RBI added.