"Sluggish economic growth and high interest rates are being touted as primary drivers for rising bad loans and if the economic scenario continues there is no doubt that asset quality would suffer further", as per the ASSOCHAM latest study.
Other factors like delays in obtaining statutory and other approvals as well as lax credit appraisal and complacency in monitoring by banks were also significantly responsible for deteriorating asset quality. The asset quality of banks has deteriorated in the aftermath global economic crisis of 2008.
Releasing the study here today, the ASSOCHAM spokesperson said, gross NPA of the public sector banks were Rs 41,378 crore in March 2006, which came down to Rs 38,305 crore in March 2007 because of better economic environment. However, it has shown an upward trend since March 2008.
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