26 banks together – both private and public – reporting gross NPAs of over Rs 7.31lakh crore.
New Delhi: Finance minister Arun Jaitley will hold the annual NPA review meetings of the public sector banks towards the end of this month, official sources said. It will be Jaitley’s first major engagement with state lenders after resuming office after a gap due to medical issues. He will review banks’ NPA statuses, recoveries through resolutions, NCLTs and challenges. He will also seek their inputs on lending shortcomings and urge larger focus on MSMEs.
The Indian banking system has been reeling under the weight of bad loans, with 26 banks together – both private and public – reporting gross NPAs of over Rs 7.31lakh crore, translating into an increase of about 50 per cent from the corresponding period last year.
PSBs collectively posted loss of Rs 16,600 crore in the June quarter and gross NPAs have exceeded Rs 8.5 lakh crore, up 19 per cent year-on-year, while total provision for NPAs jumped 28 per cent YoY to Rs 51,500 crore. Only two banks – Vijaya Bank and Indian Bank – reported a net profit. The rest of PSBs had collectively posted a net loss of over Rs 87,000 crore.
But the trouble is increasing for PSBs, which alone added nearly Rs 1 lakh crore to the pool of bad assets over the December quarter and Rs 1.11 lakh crore during the March quarter, a Care Ratings report showed.
PSBs alone contributed to nearly Rs 6.16 lakh crore to the total bad loan pile, which for the 26 banks rose by Rs 2.5 lakh crore over the corresponding period last year. The GNPA ratio for PSBs was at 13.41 per cent of the total advances. The bad loan ratio remained largely stable for state-run lenders, in the range of 11-12 per cent, in the first three quarters of FY18, but increased by 163 bps in the fourth quarter of FY189 to 13.41 per cent.
Of the 21 PSBs, 11 are under the Prompt Corrective Action (PCA) watch of RBI for poor asset quality surge and huge NPAs. The government recently infused Rs 11,336 crore in five state-owned banks, including scam-hit PNB to help these lenders meet the regulatory requirement.
Asked about the next round of capital infusion in banks, the source said it would depend on their performance.