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Indian banks grappling with surging bad loans

By Religare

Non-performing assets (NPA) at Indian banks have risen sharply in thelast few months as India Incorporation struggles to pay its financialdues on time amid a worsening slowdown in Asia's third largesteconomy.

For some domestic lenders, bad loans haven surged by as much as 85 percent since the start of the fiscal 2012-13 amid record high levels ofcorporate debt restructuring (CDR) cases, RBI data showed on Sunday.

A minimum of 35 domestic banks have seen a significant increase intheir bad loans in the first two quarters of fiscal 2012-13.


Gross NPAs at 35 listed Indian banks increased by more than 28 percent or over Rs 32,000 crore in H1 fiscal 2012-13 with their total badloans surging to Rs 1.47 lakh crore as on September 30, 2012.

The total NPAs of all banks operating in India (including unlisteddomestic banks and foreign banks) was Rs 1.42 lakh crore at March 31,2012.

Indian banks witnessed a record 74 CDR cases related to a total debtamount of Rs 40,000 crore for restructuring in the first half of thecurrent fiscal.

Lenders such as Punjab National Bank, Allahabad Bank and Lakshmi VilasBank have seen their bad loans surge by 60 per cent in the first halfof 2012-13 while for South Indian Bank, the rise in bad loans in thesame period has been a mammoth 86 per cent.

"Banks need to, not only utilise effectively, the various measures putin place by RBI and the government for the resolution and recovery ofbad loans, but also have to strengthen their due diligence, creditappraisal and post-sanction loan monitoring systems to minimise andmitigate the problem of increasing NPAs," the RBI said.

Story first published: Monday, November 19, 2012, 9:30 [IST]
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