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 INR 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 INR 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 INR one lakh of NPAs.
Total stressed assets of banks increased to INR 7.40 lakh crore at the end of March 2015 from INR 2.33 lakh crore as on March 2011, nearly a four-fold increase.
As regards the Gross NPAs, it surged to INR 4,01,590 crore at the end of December 2015 from INR 2,98,641 crore, a jump of over INR 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 INR 2,67,065 lakh crore in March 2015 to INR3,61,731 lakh crore in December 2015. In contrast, the private sector banks’ Gross NPA rose to INR 39,859 crore at the end of December from INR 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 INR 690 crore as against INR 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 INR12,867 crore in the third quarter.
For example, Bank of Baroda reported a whopping loss of INR 3,342 crore, the highest ever quarterly loss posted by any public sector bank in the industry. IDBI Bank recorded a loss of INR 2,184 crore while Bank of India posted a loss INR 1,505 crore for the quarter ended December.
Besides, UCO Bank reported a net loss of INR 1,497 crore, followed by Indian Overseas Bank (INR 1,425 crore), Central Bank of India (INR 837 crore) and Dena Bank (INR 663 crore).
Banks which posted sub-INR 500 crore loss were Kolkata-based Allahabad Bank (INR 486 crore), Oriental Bank of Commerce (INR425 crore), Corporation Bank (INR 383 crore) and Syndicate Bank (INR 120 crore).