Punjab National Bank (PNB), the victim of India's biggest banking scandal last year, has been ranked first among the public sector banks (PSBs) in implementing banking reforms, according to a report released on Thursday.
The trend of rising Gross NPAs, or bad loans, in the system has been reversed with the non-performing assets (NPAs) ratio on the decline for the last three quarters, said the Boston Consulting Group (BCG)-Indian Banks' Association (IBA) report.
The report -- EASE Reforms for Public Sector Banks -- said GNPAs lowered by Rs 31,168 crore in this period, GNPA ratio has started declining after peaking in March 2018 and has declined for three successive quarters since then.
In its ranking on the criterion of implementing banking reforms, PNB was followed by Bank of Baroda and State Bank of India (SBI).
The report measures the performance of each PSB on 140 objective metrics across 6 themes, including customer responsiveness, credit offtake and digitalisation.
PNB with a score of 78.4 out of 100 was ranked first in the EASE (Enhanced Access and Service Excellence) index, followed by Bank of Baroda (77.8), SBI (74.6), Oriental Bank of Commerce (69), Canara Bank (67.5) and Syndicate Bank (67.1).
PNB, which reported a nearly Rs 14,000-crore fraud committed by absconding jewellers Nirav Modi and his uncle Mehul Choksi, showed "strong performance" in parameters like customer responsiveness, responsible banking, credit offtake and financial inclusion.
After posting losses in three previous quarters, PNB returned to the black in the third quarter ending December with a net profit rise of 7.12 per cent at Rs 247 crore on speedier recoveries and a drop in bad loans.
Noting that banks are effectively addressing the NPA problem, the report said the Insolvency and Bankruptcy (IBC) process has led to large-scale NPA resolution and recovery. The PSBs have recovered Rs 2.87 lakh crore from April 2015 till December 2018, including a record recovery of Rs 98,498 crore in the current fiscal till December.
"Over the last decade, PSBs witnessed excessive build-up of stress in their loan portfolio. Much of the stress remained hidden in the form of Standard Restructured Assets (SRA) as a result of RBI guidelines," the report said.
"With the recognition of the stress since 2015, the adverse impact of the hidden stress on key financials became manifest."
The six state-run banks, which continue to remain under the RBI's prompt corrective action (PCA) framework for high level of NPAs, have been ranked in the report.
These are Indian Overseas Bank (66.7), UCO Bank (64.1), United Bank of India (60.8), IDBI Bank (60.2), Central Bank of India (55.7) and Dena Bank (53.8).
--IANS
bc/nir
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