According to the latest RBI report, after the completion of the bad credit identification process, the gross non-performing loans of banks increased to 9.1% by the end of September 2019, from 11.2% in FY18. Net non-performing assets (NPA) of all commercial banks declined to 3.7% in FY19 as against 6 per cent in FY18.
“The gross NPA ratio of all banks declined in FY19 after rising for seven consecutive years,” RBI said in its 2018-19 Trend and Progress report.
It added that the improvement in asset quality was driven by state-run lenders who experienced declines in both gross NPA and net NPA ratios.
The report noted that the slippage ratio decline, as well as the reduction in outstanding gross NPAs, helped improve the GNPA ratio.
NPA situation to improve post-March 2020: SBI chairman
Meanwhile, State Bank of India (SBI) chairman Rajnish Kumar had said on Saturday that most banks would be in good shape in terms of NPA by March and there was no shortage of cash for loan disbursement in the banking system. is. He had said at the 92nd annual conference of FICCI that there had been no significant reduction in the demand for credit in the infrastructure and consumer sectors, so there are opportunities for credit distribution in these areas. “By March 31, most banks will be in good standing in terms of NPAs,” he said.
Asked about the Reserve Bank’s complaint that the banks were not transferring the benefit of reducing the repo rate to consumers, Kumar said that banks cannot cut the interest rate by more than a limit given the risk of imbalance in assets and liabilities. The SBI chairman said that there is no shortage of capital in the banking system. He said that corporates are not taking adequate loans and are not utilizing their potential well.
Regarding lending to telecom companies for the proposed auction of spectrum, Kumar said, “It is completely unsafe for us to give loans to telecom companies for spectrum auction. It is safe on paper because the auction is going to be done by the government, but in practice But it’s completely unsafe. “
“Therefore, in such circumstances banks will have to evaluate carefully before lending to the telecom sector, as there is a high probability of default in payment of loan instalments,” Kumar said.