RBI annual report: 36 percent of bad loans have been created by these six sectors

The Reserve Bank has said about 36 percent of the overall 4.1 percent bad assets in the system have been created by six sectors of the economy - infrastructure, metals, textiles, chemicals, engineering and mining. These sectors, though, have only 30 per ent of the credit share.<br />

hidden August 24, 2014 15:04:12 IST
RBI annual report: 36 percent of bad loans have been created by these six sectors

The Reserve Bank has said about 36 percent of the overall 4.1 percent bad assets in the system have been created by six sectors of the economy - infrastructure, metals, textiles, chemicals, engineering and mining. These sectors, though, have only 30 per ent of the credit share.

The central bank, in its annual report for FY2013-14, said gross non-performing assets in the system have grown to
4.1 percent in FY'14 from 3.4 percent a year ago. It also said the contribution of mandatory priority sector loans to the overall bad assets have come down during the last fiscal.

Stating that the state-run banks are the chief sources of stress, RBI said these six specifically identified sectors of infrastructure, metals and products, textiles, chemical and chemical products, engineering industries and mining and quarrying alone contributed 36 percent of gross NPAs, as against their 30 percent contribution to total advances.

The gross non-performing assets ratio for the non-priority sector grew to 4 per cent as of March 2014 as against 3 percent in the year ago period, while the same for priority sector stood stable at 4.4 per cent, it said.

"The non-priority sector has contributed more in thedeterioration of the loan asset quality of the banking sectorin recent years," it said, adding that the contribution of PSLloans to the overall bad loans narrowed to 36 per cent as ofFY'14 from 40 percent in FY'13.Commenting on the health of the sector, the RBI saidit "remains satisfactory".

On reports of some improvement shown by the banks inthe asset quality in the fourth quarter, the RBI hinted atthere not being a cause for celebration yet, as this was dueto the asset sales to ARCs.Additionally, it also highlighted the lurking threat,pointing out at the high growth in restructured assets duringthe previous fiscal 2012-13.

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