Given the slowdown in certain important sectors like steel, textiles, aluminium etc, and the ongoing Asset Quality Review (AQR), may push stressed assets of the banks to Rs 10 lakh crore mark in the fourth quarter of the current fiscal, reveals the ASSOCHAM latest study.
At the end of December, the total stressed assets (Gross NPA+ restructured assets) of all the banks were at Rs 8 lakh crore which is expected to see a significant jump in the current quarter itself, adds the study.
AQR undertaken by the RBI and other factors have resulted in a spike in bad assets with lenders recognising nearly Rs one lakh of NPAs.
Total stressed assets of banks increased to Rs 7.40 lakh crore at the end of March 2015 from Rs 2.33 lakh crore as on March 2011, nearly a four-fold increase.
As regards the Gross NPAs, it surged to Rs 4,01,590 crore at the end of December 2015 from Rs 2,98,641 crore, a jump of over Rs 1 lakh crore in nine months of the current fiscal.
While releasing the study here, an ASSOCHAM spokesman said, “Gross NPAs of state-run banks increased from Rs 2,67,065 lakh crore in March 2015 to Rs 3,61,731 lakh crore in December 2015. In contrast, the private sector banks’ Gross NPA rose to Rs 39,859 crore at the end of December from Rs 31,576 crore at the end of March 2015.”
Thus, in percentage terms, the gross NPA ratio of Public Sector Banks (PSBs) increased sharply from 5.43 per cent as on March 2015 to 7.30 per cent as on December 2015 while it was milder in case of private sector banks. The upward movement was from 2.20 per cent to 2.36 per cent.
The fact that banks are expecting subdued last quarter numbers due to mounting bad loans was evident from their advance tax deposits. Quoting an example ASSOCHAM said that State Bank of India (SBI) paid an advance tax of Rs 690 crore as against Rs 1,749 crore deposited in the March quarter last fiscal, a decline in about 60 per cent.
Many banks including State Bank of India (SBI) have already projected continuation of equally bad numbers in the fourth quarter as well.
The mounting bad loans have eroded the profitability of all banks with 11 public sector lenders reporting losses of Rs 12,867 crore in the third quarter.
For example, Bank of Baroda reported a whopping loss of Rs 3,342 crore, the highest ever quarterly loss posted by any public sector bank in the industry. IDBI Bank recorded a loss of Rs 2,184 crore while Bank of India posted a loss Rs 1,505 crore for the quarter ended December.
Besides, UCO Bank reported a net loss of Rs 1,497 crore, followed by Indian Overseas Bank (Rs 1,425 crore), Central Bank of India (Rs 837 crore) and Dena Bank (Rs 663 crore).
Banks which posted sub-Rs 500 crore loss were Kolkata-based Allahabad Bank (Rs 486 crore), Oriental Bank of Commerce (Rs 425 crore), Corporation Bank (Rs 383 crore) and Syndicate Bank (Rs 120 crore).