State Bank of India (SBI), India’s largest lending institution in terms of assets, announced poor first-quarter returns on Monday, down by about 11.8 percent last year; amidst rising speculations of bad loans in the public sector banks diminishing asset quality of the country.
Disappointing decline in the shares of the leading bank, in Asia’s third largest economy continued to contribute tofalling stocks in the last six months amidst economy slowdown. Issuing Non-Performing Loans (NPL) and disguising bad loans as restructured loans have been a cause of concern among RBI’s recent initiatives to control liquidity and combat rupee depreciation, triggering sharp drop in bank stock value.
Additionally, blocking of huge credit resources by the bankrupt Kingfisher Airlines has increased frustration amidst state-backed groups of banks led by SBI, who have now sabotaged Kingfisher’s main company office in the hope of loan recovery. Many large financial organizations are now increasingly resorting to NPL amidst economy crisis in the backdrop of India’s unclear rules on loan classification and facilities