MUMBAI, June 11: The new private sector banks—many of which are yet to complete three years of existence have accumulated a substantial amount of non-performing assets (NPAs). Their total NPAs have crossed the Rs 100 crore, according to Reserve Bank of India sources.

The central bank has recently intensified on-site supervision of the new banks. Besides conducting frequent inspections, the Reserve Bank scrutinises all borrowing accounts over a certain limit on a regular basis.

"Barring Centurion Bank, almost all the new private banks have some amount of non-performing assets on their balance sheets," a senior executive of one private bank told The Financial Express. However, in percentage terms, the new private banks' non-performing assets are still much lower than those of the public sector banks.

IndusInd Bank is expected to record the highest level of non-performing assets, closely followed by UTI Bank promoted by UTI, LIC, GIC and its subsidiaries. UTI Bank, in fact, was the only new bank to record NPAs in its very first year of operations when its bridge loan exposure to MS Shoes turned sticky. Other new banks which are likely to declare a sizable quantum of non-performing assets include Global Trust Bank and Times Bank.

The Reserve Bank of India has recently broadbased the disclosure norms and directed commercial banks to declare the amount of net non-performing assets in their balance sheets. It has also asked banks to specify the quantum of provisioning made on account of non-performing assets. However, most of the new banks could get away without revealing non-performing assets figures as they had finalised the results before the issuance of the RBI directive.IndusInd Bank has already created a provision for non-performing assets to the tune of Rs 7.5 crore. The actual quantum of non-performing assets will certainly be higher than the amount provided for.

ICICI Bank, which has just completed its third full year of operations, has declared gross non-performing assets of Rs 18 crore which is more than 2 per cent of its total advances. The bank has provided for Rs 1.60 crore on account of non-performing assets. It has created an additional provision of Rs 3.5 crore which could be used later to set off bad advances.

In contrast, HDFC Bank has managed to restrict its non-performing assets to just 0.50 per cent (Rs 3 crore) of its total advances. It has created a provision for non-performing assetsat Rs 4.5 crore.

Times Bank is expected to declare non-performing assets to the tune of Rs 11 crore. The bank is, however, still in the process of working out the provision to be created for its non-performing assets. The bank also plans to write off the balance portion of its pre-operative expenses in the 1996-97 financial year which could further impact its bottomline.

IDBI Bank, a relatively new player, is expected to declare Rs 5 crore worth of non-performing assets in 1996-97. UTI Bank which had to write off a Rs 10 crore bridge loan to MS Shoes last year, will have non-performing assets far in excess of this amount for the year ended March 31, 1997. However, the bank's exposure of Rs 6 crore to CRB Corporation will be provided for only at the end of the current year since the account was good as of March 31, 1997, a UTI Bank source said.

"These banks, in a bid to outdo each other, have accumulated substantial non-performing assets by lending to all and sundry. While non-performing assets are unavoidable, it is surprising that these banks have accumulated such non-performing assets in such a short span of time," an industry source pointed out.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.