In absolute terms, the net NPAs of 25 public sector banks increased by 24 per cent in the last last three years, from Rs 13,794.60 crore in 2005-06 to Rs 17,015.04 crore in 2007-08. The last year itself saw the sticky assets rising by 17 per cent.
The gross NPAs increased by 5 per cent in 2007-08. The asset quality of public sector banks peaked in the first half of 2007-08 due to increase in the lending rates. The amount recovered and written off (Rs 9,642 crore) was less than the fresh NPA addition of Rs 11,813 crore.
The heap of sticky assets, in absolute terms, does not have much significance as the percentage of NPAs depends on the size of the loan portfolio. If the loan assets are huge, even a big amount of NPAs can look relatively small.
However, the fact remains that PSBs have been able to reduce their net NPAs by virtue of provisions and not by cautious lending and monitoring of loan accounts.
The asset quality of public sector banks is approaching its peak as the system-wide net NPA ratio is below 1 per cent. Twenty PSBs now have less than 1 per cent net NPA compared to 14 banks in FY06-07. This is due to effective recovery measures, lower delinquency levels and higher provision coverage ratios. The gross NPAs, however, continue to be higher.
Andhra Bank has one of the best-managed credit portfolios. Its net NPAs to advances were 0.15 per cent, the lowest among peers. The bank continues to have a healthy assets profile and a strong capital base.
United Bank of India, IDBI Bank, Central Bank, State Bank of India and UCO Bank have NPAs between 1 and 2 per cent. Dena Bank reduced its net NPAs by 210 bps to 0.94 per cent from 3.04 per cent in 2005-06.
Oriental Bank of Commerce's net NPAs, as a per cent of net advances, went up by 50 bps from 0.49 per cent to 0.99 per cent at the end of March 2008. The net NPAs of State Bank of India increased by Rs 2,167 crore (41 per cent) to Rs 7,424 crore.
The net NPAs to net advances of SBI and SBI group stood at 1.78 per cent and 1.43 per cent respectively in 2007-08.
