High demand for loans helped State Bank of India post healthy profits for the third quarter. But bad loans have also shot up, raising concerns about the bank’s performance. Profit rose 15% to Rs3,263crore compared to the same period the previous year. That was on a 26.7% increase in net interest income to Rs11,470crore. On the downside, non-performing loans are now at a record high up Rs40,098crore compared to Rs23,438crore in the year-ago period. That in turn means, gross NPAs are now at 4.61% on loans. SBI chairman Pratip Chaudhuri said about one-quarter of the increase in NPAs was because of loans to an airline. And while he did not mention which airline—it’s clear he was referring to Kingfisher—the troubled carriers who’s debt got classified as an NPA during the third quarter.
Switching to the economy, there’s finally a glimmer of hope for India’s struggling economy. Inflation has eased to its lowest in more than two years. The wholesale price index rose 6.55% in January. In December it stood at 7.47%. Finance minister Pranab Mukherjee said he was now confident inflation would drop to around 6% by March-end.
But not everyone is so confident inflation will ease. Some economists have argued that the low figure is largely because of the base effect—since inflation stood at 9.46% last January. Others point out seasonal factors have cut down food inflation in December and January, bringing down overall inflation as well.
State-run Indian Oil Corporation is considering a hike in petrol prices if crude oil continues to remain at around $115per barrel. Growth in petrol consumption so far this fiscal is just 5.2% compared the usual 10%.
India’s IT industry is expected to go through a slowdown in the next fiscal. Industry body Nasscom says the IT and BPO industries will add only 200,000 jobs in 2012-13. That’s compared to the 230,000 expected in the current fiscal. Europe’s debt crisis is being cited as the main reason.
And finally, the great Indian demand for gold seems to have waned. A report from the World Gold Council says demand fell some 42% in the October to December quarter. It says the main culprits were volatile prices and a weak rupee. The fall in demand came despite the festive