PSBs' bad loans rise to 15% of gross advances in FY18

The gross bad loans of public sector banks (PSBs) hit 15% of advances in 2017-18, the government said in Parliament on Tuesday, reports PTI from New Delhi.

The gross non-performing assets (NPA) ratio for PSBs stood at 14.6% in 2017-18, minister of state for finance Shiv Pratap Shukla said in Parliament citing data from the Reserve Bank.

IDBI Bank topped the list in terms of gross bad loans at 28% of gross advances followed by Indian Overseas Bank (25.3%); UCO Bank (24.6%); United Bank of India (24.1%); Dena Bank (22%); Central Bank of India (21.5%); Bank of Maharashtra (19.5%) and Punjab National Bank (18.4%), the minister said.

SBI had gross NPAs to the tune of 10.9% of gross advances as on March 31, 2018.

Except for Vijaya Bank, with gross NPA of 6.3% as also the lowest amongst all PSBs during the year and Indian Bank at 7.4%, the rest of the lenders had their NPAs in double digits.

Thus, only these two banks posted profits, at Rs 727 crore and Rs 1,259 crore respectively, in 2017-18.

While all the others registered losses in crores with PNB topping the chart at Rs 12,283 crore.

PNB losses were exacerbated by over Rs 14,000 crore scam at the bank, allegedly by diamond jeweller Nirav Modi and his relatives unearthed in February.

IDBI Bank registered a net loss of Rs 8,238 crore; SBI Rs 6,547 crore; Bank of India Rs 6,044 crore; Union Bank of India Rs 5,247 crore; Central Bank of India Rs 5,105 crore and Allahabad Bank a loss of Rs 4,674 crore among others, Shukla said citing the RBI data.

In view of the rising bad loans, the RBI had asked banks for a Asset Quality Review (AQR) in 2015, he said, adding that the exercise revealed high incidence of non-NPAs in PSBs.

Under AQR, the expected losses on stressed loans, not provided for earlier under flexibility given to restructured loans, were reclassified as NPAs and provisions were made against them, the minister said.

The minister said that the PSBs have began clean-up exercise by recognising bad loans and made provisions for the expected losses.

"In the last 25 financial years, the gross NPA ratio for PSBs was highest in 1993-94 at 24.8% and was also higher in six other financial years," Shukla said in response to a query if the 21 PSBs suffered the highest ever losses and biggest pile-up of gross NPAs in 2017-18.

Shukla said banks have set up a committee on resolution of stressed assets and have adopted a five-pronged strategy to clean up their balance sheets.

"A number of measures have been taken to streamline recovery...The Insolvency and Bankruptcy Code, 2016 (IBC) has been enacted to create a unified framework for resolving insolvency and bankruptcy matters," the minister said.