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Indian Banks Continue To Reel With Highest NPAs Recorded

The continued growth of bad loans in the Indian banking industry is alarming observers. According to the latest data released by Care Ratings, total bad loans held by 38 listed commercial banks has crossed Rs 8 lakh crore at the end of the quarter ending June 2017, which was a growth of 16.6 percent quarter-on- quarter.

Close to 90 percent of this is with state-owned banks as they account for over 70 percent of the country’s banking industry by way of assets. The Non-Performing assets (NPAs) ratio of these 38 banks is reported to have increased to 10.21 percent in June 2017 up from 8.42 percent in June 2016, the highest recorded over the last six quarters.

The RBI initiated an Asset Quality Review (AQR) in the third quarter of 2016 which resulted in the banks’ books showing big jump in gross NPAs. The NPA growth was expected to stabilize subsequently but the latest report shows continued growth.

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In the past seven quarters, NPAs with public banks have gone up to Rs 7.33 lakh crore in the second quarter of this year from Rs 3.14 lakh crore in the quarter ending September 2015. For 17 private banks, the NPAs was up to Rs 96,201 crore in the second quarter of this year from Rs 36,878 crore in September 2015.

State Bank of India (SBI), India’s largest lender is at the top with Rs 1.88 lakh crore as on 30 June 2017. This includes the NPAs of five associate banks that merged with it earlier this year. Punjab National Bank, Bank of India, IDBI Bank and Bank of Baroda are the others named in the top five.

These five banks contribute to 47.4 percent of the total NPAs which amounts to Rs 393,154 crore. The top 12 banks with highest NPAs account for 75.7 percent of the total amount with 11 of them being state-owned. ICICI Bank with gross NPAs worth Rs 43,148 crore is at the top in terms of private lenders followed by Axis Bank and HDFC Bank. Yes Bank is the onlynbank reported to have an NPA ratio of less than 1 percent. IDBI Bank suffers the worst at 24.11 percent followed by Indian Overseas Bank and UCO Bank.

The Indian government and the Reserve Bank of India, which is the central bank have looked to tackle the issue by using a variety of measures such as giving banks more power to take action against loan defaulters and the government passing the Insolvency and Bankruptcy Code (IBC) under which a National Company Law Tribunal will be set up .


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