Bad loans for public sector banks have grown
Over the second quarter, bad loans for public sector banks have grown at a record pace. Union Bank’s loan defaults rose 37% and SBI’s gross NPAs jumped 22% while Bank of India shot up by over 16%. Gopika Gopakumar, CNBC-TV18′s gives a lowdown. Restructured accounts have gone up for some PSU banks. In the first quarter, Union Bank restructured loans worth Rs 756 crore versus Rs 228 crore. In the second quarter itself, Punjab National Bank has restructured Rs 4,000 crore of loans while in the first quarter it has Rs 563 crore.
Bank of Baroda has seen gross NPLs fall to 1.41% from 1.46% of total assets. Some bankers believing hoping things will reverse. “We are expecting a reversal of trend,” Chairman SBI Pratip Chaudhuri said. This could be reason why ratings agencies have reacted differently. Citing the underwriting standards and conservative lending followed by banks, S&P upgraded the Indian banking system’s risk assessment and saw no reason to panic.
The bankers agree that the jump in the fresh slippages is just a one-off event. This week, The Bank Nifty has lost 5.6%, end even banks like Axis and ICICI which do not report higher bad loans have felt the pain.