Public sector banks’ stressed assets double to Rs 5 lakh cr

By: |
Mumbai | August 13, 2016 6:41 AM

Toxic assets at a clutch of 22 public sector banks (PSBs) have doubled to Rs 5.51 lakh crore in the June quarter over Q1FY16, reports Pranay Lakshminarasimhan in Mumbai.

Around two dozen accounts had been identified by lenders for strategic debt restructuring; in the last couple of quarter several of these accounts have turned non-performing following the inability of banks to initiate the scheme. (Reuters)Around two dozen accounts had been identified by lenders for strategic debt restructuring; in the last couple of quarter several of these accounts have turned non-performing following the inability of banks to initiate the scheme. (Reuters)

Toxic assets at a clutch of 22 public sector banks (PSBs) have doubled to Rs 5.51 lakh crore in the June quarter over Q1FY16, reports Pranay Lakshminarasimhan in Mumbai. The consequent surge in provisions has impacted their bottom lines; the banks have posted a combined loss of R979.90 crore compared with a collective net profit of Rs 9,448.90 crore in Q1FY16. Bank of India, UCO Bank and Central Bank of India were among the lenders who reported a loss in the June quarter.

The rise in gross non-performing assets (NPAs) — especially on the books of PSBs — is mainly due to the asset quality review (AQR) conducted by the Reserve Bank of India last year. The AQR required banks to identify stressed assets and provide for them, because of which both bad loans and provisions surged over the last few quarters. The central bank has urged lenders to provide for emerging stress as well.

Around two dozen accounts had been identified by lenders for strategic debt restructuring; in the last couple of quarter several of these accounts have turned non-performing following the inability of banks to initiate the scheme.

IDBI Bank CFO RK Bansal observed on Thursday the next quarter was likely to be very similar with respect to NPAs.

“The stress is still there. It is probably from the December quarter that things might start to get better and we can probably see the beginning of a turnaround,” Bansal said.

While non-performing assets have risen for most state-owned banks, the numbers as a share of the gross advances appear higher because in many cases the loan books have shrunk during the June quarter.

 

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