Banks' bad loans to industries increased four-fold from March 2015 to Dec 2017
The State Bank of India (SBI) office building is pictured in Kolkata, India, February 9, 2018. REUTERS/Rupak De Chowdhuri
Banks' bad loans to large industries increased more than four-fold in between March 2015 and December 2017, the government informed the Lok Sabha on Friday.
While the gross NPAs to large industries were Rs 1,23,232 crore in March 2015, it increased to Rs 5,27,876 crore in December 2017.
While the gross NPAs to large industries were Rs 1,23,232 crore in March 2015, it increased to Rs 5,27,876 crore in December 2017, Minister of State for Finance Shiv Pratap Shukla said in a written reply.
He said that the State Bank of India had the highest exposure to bad loans of large industries at Rs 1,43,526 crore, followed by Punjab National Bank at Rs 32,710 crore. Among others, Bank of India, IDBI bank, Union Bank of India and Uco Bank had exposure of bad loans to big industries.
However, the minister said that the increase in NPAs in advances to large industries was primarily due to asset quality review and subsequent transparent recognition by banks.
RBI initiated asset quality review in 2015, with a view to have clean and fully provisioned bank balance sheets by March 2017. Under this, restructured loans with performance issues and potentially weak loans were identified as Non-Performing Assets (NPAs). AQR revealed high NPAs, he said.
Under the AQRs, expected losses on stressed loans, not provided for earlier under the flexibility given to restructured loans, were reclassified as NPAs and provided for. Banks initiated cleaning up by recognising NPAs and provided for expected losses.
As a result, gross NPAs of scheduled commercial banks rose from 4.28% (Rs 3,23,464 crore) of advances as of March 2015 to 9.31% (Rs 7,90,488 crore) as of March 2017. Over the same period, most of the earlier standard restructured loans were recognised as NPAs, as they failed to meet RBI stipulated conditions.