Gross NPAs of banks crossed 4 per cent in the September quarter at Rs 2.37 trillion and are projected to exceed 4.4 per cent, or Rs 2.9 trillion, by the end of the financial year, according to a report by rating agency Icra, an associate of Moody's Investors Service.
Most NPAs are generated by state-run banks. United Bank of India has an NPA level of over 7 per cent, while for State Bank of India, it is more than 5 per cent.
The gross NPAs of the 26 public sector banks are set to touch 4.8 to 5 per cent by the end of this financial year at Rs 2.6 trillion. In March, this was 3.6 per cent, or Rs 1.64 trillion, while they were at 4.5 per cent, or Rs 2.14 trillion, in the second quarter, as per Icra data.
As the bad loan pile mounts, so is the recasting of debt. As of the September quarter, the CDR books stood at Rs 2.72 trillion out of the Rs 3.62 trillion that came for restructuring, according to Icra data.
While Rs 1.96 trillion worth of loans are live under CDR (corporate debt restructuring) as of the September quarter, at the end of the period, Rs 0.51 trillion worth of restructured loans came out of the CDR mechanism.
The RBI's discussion paper yesterday offered a carrot and stick approach to tackle the crisis.
The discussion paper pitched for early action by banks to jointly tackle the problem and penalise borrowers not cooperating in rescue efforts.
The paper called for "early formation of a lenders' committee with timelines to agree to a plan for resolution, and penalising wilfully or uncooperative defaulters" among others.
