Bad loans continued to be a matter of concern for all public sector banks barring the State Bank of India (SBI). The quarter ending March saw a spike in the NPAs, restructured assets contributed to the rise.
All the state own lenders apart from SBI saw a slippage in loan quality. The gross non- performing assets (NPA) increase by 10.5%. Restructuring of assets in airlines, state electricity boards, agriculture, and telecommunication sectors have been the major cause.
The gross NPA ratio of banks for the last quarter of FY11 stood at 3% of the advances as against 2.25% the last year. Central Bank of India, Punjab and Sind Bank, Indian Bank, and Punjab National Bank saw an increase of 35% in their gross NPA ratio. Restructured loans accounted for 5.9% of the total advances made by the public sector banks.
As much as 12% of restructured assets slipped into non performing assets. The slippages have cause the increase in NPA ratio to 3, which would otherwise have been around 2.3 , the same as that of private banks.
The current economic condition has raised concerns. With nearly 50% of outstanding restructured assets added last fiscal, slippages can increase.