A new set of data released by TransUnion CIBIL, a credit information bureau, gives more reasons to the banks to fret. As per the data, the total quantum of wilful defaults by borrowers has risen to over Rs 1 lakh crore from close to Rs 75,000 crore in 2016. Trend-wise, this spurt in NPAs attests to the progressively deteriorating state of assets within the banking economy since FY 2012.
In an interview, Milne talks about the new opportunities for banks to grow, what is holding back private investment and his outlook for the economy. The level of bad debt in the banking system is extremely high and the crisis is happening at an awkward time. We are not seeing much new demand coming, even from retail borrowers who have been traditionally a strong contributor to loan growth in India.
The rising bad loans in the MSME and the agriculture sector have adversely affected performance of banks in Gujarat, reveals the latest report released after a meeting of State Level Banker's Committee (SLBC)- Gujarat on Saturday. The gross NPAs of banks in Gujarat stood at Rs 35,342 crore which is 7.4 per cent of the total loans provided by the banking sector.
The quantum of bad loans registered in Gujarat have increased by 2.5 times. The gross NPAs of banks in Gujarat stood at Rs 35,342 crore which is 7.4 per cent of the total loans provided by the banking sector. In comparison, the quantum of NPAs as on June 2014 stood at just Rs 14046 crore which was 4.03 per cent of the gross advances. At the end of March 2017, the NPAs in Gujarat stood around Rs 30,475 crore.
The workforce of the banking industry is preparing for a strong protest action during the next couple of months in order to convey their resentment over such issues. Sharma was visiting the city in connection with the opening of the Officers Guest House at Dharamshala. Sharma drew attention towards the huge NPAs created by the corporate sector, helplessness of bankers in recovering the loans in the absence of strong political will and stringent legal frame work.
As India's economic growth slips to the lower end of the 5-8% range and companies grapple with demand slowdown and production cuts, banks are staring at a huge pileup of bad assets. On their part, banks are struggling to clear NPAs through the Insolvency and Bankruptcy Code (IBC) and various structuring schemes. If stressed accounts are small-sized and do not involve a lenders' consortium, banks are happy to solve them through one-time settlements.
Rating agencies have warned the struggling banking sector on its deteriorating performance, especially the weak capitalisation, financial performance and rising non-performing assets (NPAs). Crisil has estimated the bad loan ratio to rise by 1 percentage point to 10.5 per cent by March 2018. These are unlikely to stress bank balance sheets the way large corporate NPAs did, said Gurpreet Chhatwal, President, CRISIL Ratings. Banks are better placed here because exposures are spread across industries and not as chunky as corporate loans.
Ratings agency Crisil has estimated stressed assets in the banking system to be around Rs 11.5 lakh crore, or nearly 14 per cent of the total advances, and does not expect this number to increase significantly over the medium term. About two-thirds of the overall stressed assets in the banking system has already been recognised by banks as non-performing assets (NPAs) as on March 31, 2017.
Crisil Ratings today said banks have only recognised two-thirds of their stressed loans as non-performing assets, and estimated the bad loan ratio to rise by 1 percentage point to 10.5 per cent by March 2018. The 9.5 per cent NPA figure for March 2017 includes only two-thirds of the overall stressed assets. With the majority of stressed assets now recognised as NPAs, rest of the corporate loan portfolio of banks can be expected to perform better over the medium-term, Crisil president Gurpreet Chhatwal said.
Crisil Ratings on Thursday said banks have only recognised two-thirds of their stressed loans as non-performing assets, and estimated the bad loan ratio to rise by 1 percentage point to 10.5 per cent by March 2018. The 9.5 per cent NPA figure for March 2017 includes only two-thirds of the overall stressed assets. Faster resolution of stressed accounts through the Insolvency and Bankruptcy Code and various structuring schemes, is critical to improving the asset quality of banks, the agency said.
We have to make high provisions, also now with the NCLT cases, UCO Bank Chief Executive RK Thakkar told BTVi channel. Thakkar said that he expected the first tranche of the government support to arrive to the bank in a month's time. Recapitalisation bonds would be one of the possible instruments to explore in the efforts to supplement the government recapitalisation. The PSBs have accumulated a high ratio of NPAs, going up to 17-18 per cent of their loan portfolio.
As the country throws around various numbers while debating development, economy and demonetisation, latest data mined by Thomson Reuters mined data shows India's corporate debt rose to a seven-year high at the end of March, and the economy is suffering as a result. The slowdown was led by the manufacturing sector, which expanded at 1.2 percent from 10.7 percent a year earlier. The services activty was hit in August as well, even as banks continued to struggle with non-performing asstes NPAs.
Sharma added that as regards the banking sector there is a long list of issues like shortage of staff, real recovery of NPAs, withdrawal of FRDI Bill, an increase of service charges of public and compensation of demonetisation. The workforce of the banking industry is preparing for a strong protest action during the next couple of months in order to convey their resentment over such issues. Sharma was visiting the city in connection with the opening of the Officers Guest House at Dharamshala.