Banks' bad loans pile crosses Rs 10 lakh cr, up Rs 1.39 lakh cr in March quarter; the NPA mess explained in 7 charts

Indian banks’ gross non-performing assets (NPAs), or bad loans, stood at Rs 10.25 lakh crore as on 31 March 2018. On quarter, the pile has grown by Rs 1.39 lakh crore or 16 percent from Rs 8.86 lakh crore as on 31 December 2017. This chunk now accounts for 11.8 percent of the total loans given by the banking industry. For financial year 2018, the total bad loans of these banks rose by a whopping Rs 3.13 lakh crore. Taking note of the alarming bad loans situation, the Narendra Modi-led government, last year, announced a Rs 2.11 lakh crore bank recapitalisation plan to pull out state-run banks from the mess. As much as 90 percent of the above-mentioned sticky assets are on the books of government-owned banks. [caption id=“attachment_4496675” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] A break-up of the NPAs shows that 21 public sector banks (PSBs) saw their bad loans pile grow by Rs 1.19 lakh crore (or 15.4 percent) to Rs 8.97 lakh crore in the March 2018 quarter, compared to December 2017’s figures, while that of 18 private banks surged by Rs 19,446 crore or 17.9 percent to Rs 1.28 lakh crore in the March 2018 quarter from Rs 1.09 lakh crore in the December 2017 quarter. After making provisions, the net bad loans of these banks stood at Rs 5.18 lakh crore in the March 2018 quarter as against Rs 4.69 lakh crore in the December 2017 quarter. Industry leader, the State Bank of India (SBI), which tops the NPA chart, has logged an increase of Rs 24,286 crore in bad loans in the March quarter to Rs 2.23 lakh crore. The Nirav Modi scam-hit Punjab National Bank (PNB) has reported the maximum rise of Rs 29,100 crore in gross NPAs to Rs 86,620 crore in the March quarter. Barring the Bank of India (BoI) and Oriental Bank of Commerce (OBC), most other PSBs’ also recorded a rise in bad loans during the quarter. While Bank of India’s gross bad loans declined by Rs 1,920 crore in the March quarter, that of OBC was down by Rs 1,417 crore. Among private banks, the gross NPAs of ICICI Bank and Axis Bank have risen significantly. ICICI Bank’s bad loans pile grew by Rs 8,024 crore or 17.4 percent in the March 2018 quarter to Rs 54,063 crore; Axis Bank’s widened by Rs 9,248 crore or 37 percent to Rs 34,249 crore in the March 2018 quarter from Rs 25,001 crore during the December 2017 quarter. These seven charts throw more light on the bad loans crisis that has engulfed the nation’s banking sector: The Modi government has time and again blamed the previous UPA-regime for the bad loan mess, saying NPAs are a legacy issue. It isn’t clear whether the government has grasped the gravity of the situation. Indeed, the government has taken steps to address the bad loans mess like the NPA ordinance, giving the central bank more power to direct banks to take action against loan defaulters, and the passage of the Insolvency and Bankruptcy Code (IBC). While these steps are welcome, they are unlikely to help solve the bad loans problem in the immediate future. It will take years before banks can get rid of NPAs, accumulated over the years on account of multiple factors.