Mumbai: Close to half of the 36 banks had non-performing asset (NPA) ratio of above 10% in, said a report by Care Ratings. Of these 17 banks with bad loan ratio of above 10%, 16 were public sector banks (PSBs), while only one was a private bank.
“Three of the PSBs had NPA ratio of above 20% (IDBI Bank, UCO Bank and Indian Overseas Bank) and one was very near at 19.9%. Three PSBs had NPA ratios of less than 10% - State Bank of India (SBI), Indian Bank and Canara Bank. Three private banks had NPA of less than 2% and eight had between 2-5% and five between 5-10%," it said.
The report said the Indian banking system was traversing an interesting phase handling issues such as capital, quality of assets, deposits and credit allocation.
“The process of recognition of NPAs gained in precedence when the asset quality review system was invoked. NPAs have been increasing subsequently as banks progressively recognized their stressed assets," the report said, adding that this process has been more or less completed for most banks and that the NPA levels have stabilized in the last couple of quarters.
Gross NPAs of a set of 36 banks increased from ₹6.71 lakh crore in March 2017 to a peak of ₹9.66 lakh crore in March 2018 and subsequently moderated to ₹8.70 lakh crore in March 2019 before increasing to ₹8.97 lakh crore in June 2019.
“The differing trend that can be seen is that the NPAs for private banks have been increasing continuously over the quarters whereas for the PSBs they rose up to March 2018 and then declined in the next four quarters before increasing again in June 2019," the report added.