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PSU banks bleed some more, as bad loans rise 12%
Public sector banks, already sitting on a pile of non-performing assets (NPA) — loans that turn unproductive — have reported fresh slippages of around Rs 99,609 crore in the first quarter of the current fiscal, double of what was reported in the corresponding period of the previous year.
Public sector banks, already sitting on a pile of non-performing assets (NPA) — loans that turn unproductive — have reported fresh slippages of around Rs 99,609 crore in the first quarter of the current fiscal, double of what was reported in the corresponding period of the previous year.
Adding to the problems, credit growth, too, has not picked up much for these banks.
According to official data, gross NPA of these banks increased to Rs 5.59 lakh crore — 11.24% of total advances — as on June 30, 2016. It was a 12% rise from Rs 5.02 lakh crore, or 9.84%, in March. Out of the 27 public sector banks, 12 have reported gross NPA of over 10%. Punjab National Bank has an NPA of 15.41%, while Bank of Baroda has 13.23%. UCO Bank reported a gross NPA of 18.66% as on June 30, 2016.
“The situation is something that we need to be concerned about, but we (the government) will do everything to ensure that the financial health of these banks are restored,” said a senior finance ministry official, who did not wish to be identified.
“Credit growth, too, is a challenge, and banks are becoming averse to lending with the rising NPA situation,” a senior public sector bank official added.
Sources said the consolidation process among these lenders would take “some time.
“No consolidation can take place until the NPA problem is addressed,” said the official quoted above.
In a meeting with the heads of public sector banks on Friday, Jaitley is understood to have told them to go aggressively on recovery of bad loans.
He also said that banks have been facing difficulty in finding buyers of stressed assets. “One of the challenges, which banks did mention that they are facing...to find alternative promoters or buyers. They have been making efforts to do that.”
