Banks' slippage-recovery-upgrade ratio at all-time high: RBI
Mumbai: The banking system's slippage to recovery and upgradation ratio has shot up to 257 as of March 2013 from 217 in March 2011 as banks have failed to implement efficient and speedy measures for
India TV News Desk
November 17, 2013 17:03 IST
Mumbai: The banking system's slippage to recovery and upgradation ratio has shot up to 257 as of March 2013 from 217 in March 2011 as banks have failed to implement efficient and speedy measures for recovering stressed assets, according to the Reserve Bank.
This increase in the slippages ratio was a tad above March 2012 when the slippage to recovery and upgradation ratio stood at 255.9.
"The extent to which banks are able to reduce NPAs through recovery efforts is deteriorating, which is evident by the increasing ratio of slippages to recovery and upgradation," RBI deputy governor KC Chakrabarty told the annual banking event over the weekend.
The average slippages to recovery and upgradation ratio for public sector banks during the six-year period of 2007-13 stood at 220.6 as against 211.3 in the comparable period (2001-06) earlier, he said.
The average slippage to recovery and upgradation ratio for old private sector banks during 2007-13 stood at 202.7 as against 179.6 in 2001-07.
Average slippage to recovery and upgradation ratio for new private sector banks during 2007-13 stood at 418.7 as against 376.6 in 2001-07, the deputy governor said, adding the numbers for foreign banks stood at 430.3 and 350.6, respectively.
Chakrabarty, however, said the write-offs have contributed significantly in reducing NPAs.
Write-offs as a percentage of reduction in NPAs stood at 37.8 as on March 2013 for entire banking system as against 33.4 as on March 2012, 42.4 in March 2011 and 50.2 in March 2010.
"In the aftermath of the 2008 crisis, the slippage ratios rose, especially for foreign banks and new private sector banks," the deputy governor said.
However, foreign banks and new private sector banks quickly arrested deterioration in the asset quality post-crisis through improved credit risk management, Chakrabarty said.
Average slippage ratio for foreign banks during 2007-13 stood at 3 as against 2.4 during 2001-07.
New private banks average slippage ratio during 2007-13 stood at 1.8 per cent as against 5.7 per cent during 2001-07.
According to the latest data, as of the September quarter, net bad loans of 40 listed banks soared 38 per cent to Rs 1.3 trillion.
"The net bad assets of the 40 listed banks have jumped 38 per cent to Rs 1,28,533 crore during the first half of this fiscal, from Rs 93,109 crore at the end of the last fiscal, and is likely to be Rs 1.5 lakh crore by the end of the fiscal," according to the data collected by NPAsource.com.
Out of the total 40 listed banks, 14 banks have reported more than 50 per cent jump in their net NPAs during these six months, the study said.
"The share of top 10 banks in net NPAs has come down to 67.8 per cent in September from 70 per cent in March 2013. Net NPAs of seven banks were higher than 3.5 per cent at the September quarter as against none at the March quarter," it said.
Gross NPAs as of the September quarter stood at Rs 2,29,007 crore, 27 per cent higher when compared to Rs 1,79,891 crore as of March quarter for these 40 listed banks.
According to the study, gross NPAs of listed banks have doubled since September 2011, while net NPAs have risen by 140 per cent during the same period.
During the second quarter, top public sector banks comprising State Bank of India, Bank of Baroda, Punjab National Bank, Central Bank, IDBI Bank and Union Bank have all reported more than 30 per cent rise in net NPAs. For SBI, net NPAs rose to 2.91 per cent from 2.44 per cent in Q2.
However, on a sequential basis, NPAs of the nation's largest lender came down by 39.23 per cent. The rising provisions for bad assets pulled down the net profit of the bank by 35.03 per cent.
When it comes to restructured loans, it rose to Rs 23,890 crore in Q2 of this fiscal from a year-ago period when it stood at Rs 21,266 crore, while the total cases referred to the CDR cell rose to Rs 3,62,370 crore. As much as Rs 1,96,266 crore worth loans are under CDR now.
In FY10, the CDR book stood at Rs 17,763 crore after 31 accounts were recast, which declined to Rs 6,615 crore in FY11 from 27 cases, but skyrocketed to Rs 39,601 crore from 50 accounts in FY12. In FY13, this nearly doubled to Rs 76,615 crore, while the number of accounts more than doubled to 106.
And during the first half of this fiscal the CDR books stood at Rs 45,156 crore with 33 accounts going in for recast.
This increase in the slippages ratio was a tad above March 2012 when the slippage to recovery and upgradation ratio stood at 255.9.
"The extent to which banks are able to reduce NPAs through recovery efforts is deteriorating, which is evident by the increasing ratio of slippages to recovery and upgradation," RBI deputy governor KC Chakrabarty told the annual banking event over the weekend.
The average slippages to recovery and upgradation ratio for public sector banks during the six-year period of 2007-13 stood at 220.6 as against 211.3 in the comparable period (2001-06) earlier, he said.
The average slippage to recovery and upgradation ratio for old private sector banks during 2007-13 stood at 202.7 as against 179.6 in 2001-07.
Average slippage to recovery and upgradation ratio for new private sector banks during 2007-13 stood at 418.7 as against 376.6 in 2001-07, the deputy governor said, adding the numbers for foreign banks stood at 430.3 and 350.6, respectively.
Chakrabarty, however, said the write-offs have contributed significantly in reducing NPAs.
Write-offs as a percentage of reduction in NPAs stood at 37.8 as on March 2013 for entire banking system as against 33.4 as on March 2012, 42.4 in March 2011 and 50.2 in March 2010.
"In the aftermath of the 2008 crisis, the slippage ratios rose, especially for foreign banks and new private sector banks," the deputy governor said.
However, foreign banks and new private sector banks quickly arrested deterioration in the asset quality post-crisis through improved credit risk management, Chakrabarty said.
Average slippage ratio for foreign banks during 2007-13 stood at 3 as against 2.4 during 2001-07.
New private banks average slippage ratio during 2007-13 stood at 1.8 per cent as against 5.7 per cent during 2001-07.
According to the latest data, as of the September quarter, net bad loans of 40 listed banks soared 38 per cent to Rs 1.3 trillion.
"The net bad assets of the 40 listed banks have jumped 38 per cent to Rs 1,28,533 crore during the first half of this fiscal, from Rs 93,109 crore at the end of the last fiscal, and is likely to be Rs 1.5 lakh crore by the end of the fiscal," according to the data collected by NPAsource.com.
Out of the total 40 listed banks, 14 banks have reported more than 50 per cent jump in their net NPAs during these six months, the study said.
"The share of top 10 banks in net NPAs has come down to 67.8 per cent in September from 70 per cent in March 2013. Net NPAs of seven banks were higher than 3.5 per cent at the September quarter as against none at the March quarter," it said.
Gross NPAs as of the September quarter stood at Rs 2,29,007 crore, 27 per cent higher when compared to Rs 1,79,891 crore as of March quarter for these 40 listed banks.
According to the study, gross NPAs of listed banks have doubled since September 2011, while net NPAs have risen by 140 per cent during the same period.
During the second quarter, top public sector banks comprising State Bank of India, Bank of Baroda, Punjab National Bank, Central Bank, IDBI Bank and Union Bank have all reported more than 30 per cent rise in net NPAs. For SBI, net NPAs rose to 2.91 per cent from 2.44 per cent in Q2.
However, on a sequential basis, NPAs of the nation's largest lender came down by 39.23 per cent. The rising provisions for bad assets pulled down the net profit of the bank by 35.03 per cent.
When it comes to restructured loans, it rose to Rs 23,890 crore in Q2 of this fiscal from a year-ago period when it stood at Rs 21,266 crore, while the total cases referred to the CDR cell rose to Rs 3,62,370 crore. As much as Rs 1,96,266 crore worth loans are under CDR now.
In FY10, the CDR book stood at Rs 17,763 crore after 31 accounts were recast, which declined to Rs 6,615 crore in FY11 from 27 cases, but skyrocketed to Rs 39,601 crore from 50 accounts in FY12. In FY13, this nearly doubled to Rs 76,615 crore, while the number of accounts more than doubled to 106.
And during the first half of this fiscal the CDR books stood at Rs 45,156 crore with 33 accounts going in for recast.