Bad loans of banks fall for the first time

The gross non-performing assets (NPAs) — bad loans or defaulted loans — of scheduled commercial banks declined by nearly Rs 2,000 ...

The gross non-performing assets (NPAs) — bad loans or defaulted loans — of scheduled commercial banks declined by nearly Rs 2,000 crore to Rs 68,714 crore during the year ended March 2003 from Rs 70,153 crore in 2001-02.

Net NPAs — after provisioning — declined to Rs 32,764 crore in 2002-03 from Rs 35,256 crore in 2001-02, Reserve Bank of India (RBI) said in the ‘Report on Trend and Progress in Banking in India 2002-03 released here.



			Bad loans still a menace • New pvt banks – Rs 7,232 cr in 2002-03, (Rs 6,821 cr in 2001-02) • Foreign banks Rs 2,829 cr in 2002-03 (Rs 2,469 cr in 2001-02) • Public sector Rs 54,086 cr in 2002-03 (Rs 56,473 cr in 2001-02) • Old pvt banks Rs 4,568 cr in 2002-03 (Rs 4,389 cr in 2001-02) Story continues below this ad Securitisation Act (for 2002-03) • Notices issued – 33,736 • NPAs involved – Rs 12,147 cr • Actual recovery – Rs 499.2 cr • Cases involved – 9,946

Bankers attributed the fall in bad loans to strong recovery measures after the enactment of the new Securitisation Act last year and improved risk management. The Indian Express also came out with a series titled ‘The Great Bank Robbery’ articles against loan defaults late last year.

However, the reduction in NPAs was mainly restricted to public sector banks. The gross NPAs for new generation private banks rose to Rs 7,232 crore (Rs 6,821 crore) and that of foreign banks increased to Rs 2,829 crore (Rs 2,469 crore), it added. The gross NPAs of public sector banks fell to Rs 54,086 crore (Rs 56,473 crore in 2001-02), but old private banks reported NPAs of Rs 4,568 crore (Rs 4,389 crore), the RBI said. ‘‘NPAs declined sharply in 2002-03, reflecting, inter alia the salutory impact of earlier measures towards NPA reduction and enactment of the Securitisation Act (SARFAESI) Act ensuring prompter recovery without intervention of court or tribunal,’’ RBI said.

Since the commencement or enforcement of the SARFAESI Act till end-June 2003, public sector banks have issued 33,736 notices for an outstanding amount of Rs 12,147 crore and have recovered Rs 499.2 crore from 9,946 cases.

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PSU banks have identified NPAs worth over Rs 12,000 crore to be sold to the asset reconstruction companies, but the process of valuation of the loans prior to sale was yet to be completed, it added.