The gross and net non-performing assets (NPAs) of the banking sector have gone up by over 12 per cent during the financial year ended March 2001, indicating that the ongoing recession is taking a heavy toll on corporate credit discipline.
This study uses data for 69 public, private and foreign banks. With the 12.68 per cent increase in non performing assets in 2000-01, the proportion of net NPAs to net worth increased by nearly 100 basis points to 49.48 per cent from 48.63 per cent in the previous year.
As gross advances increased by 18.43 per cent compared with 12.16 per cent rise in gross NPA, the cumulative gross NPA as a percentage to advances fell marginally 11.71 per cent in 2001 from 12.36 per cent in 2000.
Gross NPAs during the year increased by Rs 6,017 crore accounting for 10.81 per cent of the cumulative NPA of Rs 55,675 crore.
Net NPAs rose by Rs 3,253 crore accounting for 11.24 per cent of the cumulative NPA of Rs 28,947 crore.
Private sector banks reported the sharpest rise in sticky assets: a 33.4 per cent rise in gross NPA and a 30.12 per cent rise in net NPA.
As a result, these banks have reported growth in gross non performing assets by advances and net non performing assets by net worth ratios.
The public sector banks have registered a mixed trend with their gross non performing assets to advances showing a decline while their net non performing assets to net worth has registered a rise. The foreign banks managed to keep down both ratios during 2001.
The fifteen private sector banks in the sample reported an increase in their aggregate net NPA to NW ratio from 33.44 per cent in 2000 to 36.75 per cent in 2001.
The gross NPA to advances of these banks also moved up 7.75 per cent from 7.58 per cent in the previous year.
In absolute terms, net NPAs of private sector banks increased by 536 crore to Rs 2,314 crore and gross NPA increased by Rs 950 crore to Rs 3,797 crore.
The 26 public sector banks reduced their gross NPA/advances ratio from 13.50 per cent to 12.77 per cent in 2001.
However, the banks' net NPA/NW moved up to 59.14 per cent from 57.89 per cent. In real terms, the gross NPA rose by 10.6 per cent to Rs 49,232 crore while net NPA rose by 11.97 per cent to Rs 25,905 crore.
The foreign banks reduced the gross NPA level from 6.64 per cent to 6.45 per cent while their Net NPA declined to 8.67 per cent from 10.30 per cent.
