Net non-performing assets (NPAs) or bad loans of listed banks rose by 50% or around Rs 30,840 crore in first nine months of current financial year ended December 31, 2012.
According to a study done by NPAsource.com, as on March 31, 2012, net NPAs of 40 listed banks were Rs. 61,558 crore, which rose to Rs. 92,398 crore as on December 31, 2012.
Out of the total forty listed banks, sixteen banks have reported more than 50% jump in net NPAs during these nine months. These sixteen banks together accounted for more than 80% or Rs. 25,000 crore of incremental net NPAs.
Devendra Jain, chairman and managing director who runs NPAsource.com says, "The banking sector in India is facing this issue despite the industry and regulators trying to put in place various measures to control further increase in NPAs. We believe, net NPAs of these listed banks will cross the Rs 1 lakh crore mark as on March 31, 2013. However, it is likely that from the next financial year the NPAs in the Indian banking sector may come under control if interest rates begin to go down.”
Growth in restructured advances, particularly of big ticket loans is another cause of concern for the central bank. The recent financial stability of Reserve Bank of India showed that the proportion of restructured standard advances to gross total advances increased to 5.9% as of September 2012 from 4.7% in March 2012.
According to the report, the banking regulator is worried about increasing slippage ratio, which is likely to pressurize banks’ profitability in the next few quarters. Slippage ratio is defined as the ratio of fresh accretion to NPAs during the year to standard advances at the beginning of the year.
According to a study done by NPAsource.com, as on March 31, 2012, net NPAs of 40 listed banks were Rs. 61,558 crore, which rose to Rs. 92,398 crore as on December 31, 2012.
Out of the total forty listed banks, sixteen banks have reported more than 50% jump in net NPAs during these nine months. These sixteen banks together accounted for more than 80% or Rs. 25,000 crore of incremental net NPAs.
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Major banks like SBI, Bank of Baroda and Punjab national Bank were the banks who reported over 50% increase in Net NPAs. Net NPAs in State Bank of India (SBI), Punjab National Bank (PNB) and Bank of Baroda (BOB) rose by 60.4, 70.3 and 117.9%. These three banks accounted for close to 47% or Rs. 14,500 crore of incremental net NPAs.
Devendra Jain, chairman and managing director who runs NPAsource.com says, "The banking sector in India is facing this issue despite the industry and regulators trying to put in place various measures to control further increase in NPAs. We believe, net NPAs of these listed banks will cross the Rs 1 lakh crore mark as on March 31, 2013. However, it is likely that from the next financial year the NPAs in the Indian banking sector may come under control if interest rates begin to go down.”
Growth in restructured advances, particularly of big ticket loans is another cause of concern for the central bank. The recent financial stability of Reserve Bank of India showed that the proportion of restructured standard advances to gross total advances increased to 5.9% as of September 2012 from 4.7% in March 2012.
According to the report, the banking regulator is worried about increasing slippage ratio, which is likely to pressurize banks’ profitability in the next few quarters. Slippage ratio is defined as the ratio of fresh accretion to NPAs during the year to standard advances at the beginning of the year.