Media reports nation the parliamentary commission on estimates, headed past times Murli Manohar Joshi, has invited quondam Reserve Bank of Bharat (RBI) governor Raghuram Rajan to brief it on the mounting non-performing assets (NPAs) of Indian banks. The invitation follows quondam main economical adviser Arvind Subramanian’s praise for Rajan’s purpose inwards identifying the work together with taking steps to address it, earlier the committee. It is seeking Rajan’s views on the “crisis” —how it has been created together with how it should live on tackled. Rajan forced the banks to come upward construct clean past times conducting a first-of-its-kind property lineament review inwards the instant one-half of financial twelvemonth 2016. Reserve Bank of Bharat (RBI) inspectors checked the books of all banks amongst a fine-tooth comb, identified the bad loans together with asked the banks to construct clean upward their residue sheets inwards 6 quarters betwixt Dec 2015 together with March 2017. However, the clean-up procedure has non yet completed.
Let’s receive got a await how the 21 populace sector banks fared betwixt Dec 2015 together with June 2018. Their part of banking assets is less than 70% but when it comes to bad loans, they contribute nearly 87%. The gross NPAs of India’s populace together with somebody banks was ₹ 10.03 trillion inwards June 2018.
Data compiled past times Ashwin Ramarathinam of Mint shows the PSU banks receive got recorded unopen to ₹1.7 trillion inwards losses betwixt Dec 2015 together with June 2018, to a greater extent than than 80% of ₹ 2.11 trillion working capital missive of the alphabet infusion that the authorities has announced. This also exceeds the full working capital missive of the alphabet infusion inwards 31 years betwixt 1986 together with 2017, one-third of which—₹ 50,000 crore—flowed inwards 2016 together with 2017. Since Dec 2015, Indian Overseas Bank (IOB), Central Bank together with Uco Bank receive got posted loss inwards every quarter. While IOB’s cumulative loss is ₹ 12,997 crore, that of Central Bank is ₹ 10,800 crore together with Uco Bank ₹ 10,133 core. Bank of Maharashtra has been inwards the blood-red for 10 successive quarters, IDBI Bank Ltd together with Oriental Bank of Commerce 7 quarters, United Bank of Bharat 5 quarters, Andhra Bank iv quarters together with State Bank of Bharat (SBI), Syndicate Bank, Allahabad Bank together with Punjab & Sind Bank iii quarters each.
IDBI Bank has recorded the maximum loss inwards this menses (₹ 20,022 crore) followed past times Punjab National Bank (₹ 19,724 crore), SBI (₹ 15,010 crore) together with Bank of Bharat (₹ 13,190 crore). In 8 of the concluding eleven quarters, PSU banks equally a grouping posted cyberspace losses because of high provisions to receive got assist of their bad assets. Provision together with contingencies which were ₹ 42,417 crore inwards Dec 2015, rose to ₹ 1.29 trillion inwards March 2018, earlier dropping to ₹63,010 inwards June. Between Dec 2015 together with June 2018, the cumulative provision was ₹ 6.09 trillion.
During this period, many PSU banks such equally Allahabad Bank, Andhra Bank, Bank of Maharashtra, Central Bank, IDBI Bank, Syndicate Bank, Uco Bank together with United Bank receive got seen their gross NPAs equally a percent of their loan books growing roughly ii together with one-half times.
For others, barring Indian Bank together with Vijaya Bank, gross NPAs receive got at to the lowest degree doubled. Such loans of Indian Bank together with Vijaya Bank (two banks which receive got non made whatever loss) receive got risen roughly 1 together with a one-half times inwards these eleven quarters.
Apart from high provision, the other argue for many PSU banks making losses is stagnancy together with fifty-fifty drib inwards their cyberspace involvement income. Ditto nearly fee income. Both receive got been on the spend upward for those which receive got started shrinking their residue sheets.
Between September 2015 together with March 2018, 6 banks receive got shrunk their deposit portfolios. They are Uco Bank (16%), Corporation Bank (10%), Indian Overseas Bank (7%), Bank of Baroda (3%), BoI together with Dena Bank (less than 1% each). Indeed, SBI has grown its deposits past times 65% during this menses but mergers of its associate banks amongst itself also contributed to this. Among others, Vijaya Bank, Andhra Bank, Union Bank of Bharat together with Indian Bank receive got grown their deposit books betwixt 20% together with 28%.
When it comes to advances, 10 banks receive got contracted their books together with at to the lowest degree ii of them—Uco Bank together with Indian Overseas Bank—by to a greater extent than than one-fifth of the size of their loan portfolios. Corporation Bank, IDBI Bank together with Central Bank’s loan books receive got contracted past times roughly 16% each together with that of Bank of India, Bank of Maharashtra together with Dena Bank, betwixt 10.5% together with 12.7%. Four PSU banks receive got recorded marginal increment inwards their loan portfolios inwards the past times 1 a one-half years together with 7 of them receive got shown a double-digit growth.
What create all these mean? The populace sector banks are losing marketplace position part to their somebody peers. Since they are backed past times the sovereign, the depositors are nonetheless keeping coin amongst them but many PSU banks are turning into narrow banks—investing inwards authorities securities instead of giving loans.
Of course, at to the lowest degree ii of them receive got no choice. They are restrained past times RBI from giving fresh loans spell ix others are also non allowed to ship on expansion inwards business.
How receive got the somebody banks fared during this period? We volition receive got a await at that adjacent week.
Tamal Bandyopadhyay, consulting editor at Mint, is adviser to Bandhan Bank.
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