Banks had recorded a high percentage of non-performing assets (NPAs) in the fiscal year 2011-12 as compared to the previous fiscal because of the high interest rate regime and downturn in economic conditions in the country.
The banking sector recorded bad debts at 1.28 percent in financial year 2011-12 as compared to 0.97 percent that it recorded in 2010-11. According to data released by Reserve Bank of India (RBI), for the public sector banks alone the percentage of NPAs increased to 1.53 percent in 2011-12. A year earlier, it stood at 1.09 percent.
RBI released ‘Profile of Banks: 2011-12', which contained this data. It also revealed that State Bank of India, the country's largest public sector bank, and its associate banks together reported bad debts at 1.76 percent, a rise from 1.49 percent they reported in 2010-11. SBIs net NPAs stood at 2.22 percent in Q1 of this fiscal as compared to 1.61 percent it recorded for the same quarter in 2011-12.
On the other hand, NPAs recorded by private sector lenders on FY 2011-12 were lower than what they had recorded the previous year. Their combined NPAs stood at 0.46 percent in 2011-12 as compared to 0.56 percent which they had recorded in 2010-11. Bad debts of old private sector lenders were slightly higher at 0.58 percent (2011-12) as compared to 0.53 percent (2010-11).
RBI has advised banks to better manage their stressed assets and to keep a control over rising NPAs.