Banks' bad loans soar by 86% in first half

Nov 18 2012, 17:24 IST
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Banks' bad loans soar by 86% in first half. (Reuters) Banks' bad loans soar by 86% in first half. (Reuters)
SummaryBanks referred a record number of 74 CDR cases, involving a total debt amount of Rs 40K cr.

the resolution and recovery of bad loans, but also have to

strengthen their due diligence, credit appraisal and post-sanction loan monitoring systems to minimise and mitigate the problem of increasing NPAs," the RBI said in its report on 'Trend and Progress of Banking in 2011-12'.

So far, only four banks -- Bank of Maharashtra, Oriental Bank of Commerce, Syndicate Bank and Development Credit Bank -- have seen their gross NPAs decline, albeit by small margins from the levels recorded at the end of last fiscal.

Together, these four banks have seen their gross NPAs decline by 1.7 per cent (Rs 138 crore) to Rs 8,163 crore in the first half of 2012-13.

Among the major banks, the banks that have seen lowest increase of about six per cent in their NPA levels include ICICI Bank and HDFC Bank.

On the other hand, public-sector banking giant SBI has seen its gross NPA grow by about 24 per cent to over Rs 49,000 crore so far in 2012-13, while that of PNB has grown by 60.8 per cent to Rs 14,000 crore.

Interestingly, SBI alone accounts for nearly one-third of the gross NPA of all listed banks put together.

Among major banks, SBI's gross NPA ratio (as a percentage of total advances) has risen to 5.15 per cent from 4.44 per cent so far in the current fiscal. ICICI Bank's gross NPA ratio in the same period has fallen from 3.62 per cent to 3.54 per cent, but still remains high.

PNB's gross NPA ratio has risen sharply from 2.93 per cent to 4.66 per cent, while that of HDFC Bank has come down from 1.02 per cent to 0.91 per cent.

The banking system also witnessed a rise in restructured asset in sync with the increasing NPA level in the system.

A total of 101 cases have been referred for Corporate Debt Restructuring (CDR) in calendar year 2012 as on September 30, involving a collective debt amount of close to Rs 64,000 crore, as per the data available with the CDR cell of bankers.

RBI had helped set up CDR system in 2001 to help the corporates facing financial difficulties due to "factors beyond their control and due to certain internal reasons."

Besides helping the corporates manage their huge debts, it also seeks to safeguard the interest of banks and financial institutions through restructuring of certain debt cases.

High interest costs, along with overall sluggishness in the domestic and global economies have

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