Bad loans declined further in December quarter, says Care Ratings

According to the ratings, gross bad loans of banks declined to Rs7.5 trillion within the quarter ended as on Dec, from Rs8 trillion in Q2 of FY21, Care Ratings said on Tuesday. The NPA has declined substantially in the past few months.

Gross non-performing assets (NPAs) of public sector banks (PSBs) reduced substantially between Dec 2018 and Dec 2020. In the Public Sector Banks, the largest share was contributed by the State Bank of India at around 20% reported the highest improvement in assets quality rating and a decline in bad loan to 4.8%. Punjab National Bank also reported a significant reduction in bad loans which posted a bad loan ratio of 13% in December.

“Similarly, NPAs of regular business banks (SCBs) conjointly shrank to Rs.2 trillion in Q3 FY21 from ₹3.2 trillion in Q3 FY19 reflective a rise in Provision Coverage Ratio (PCR),” the report same.

The gross NPA quantitative relation of SCBs improved to 7% within the quarter concluded Dec.

The report also said that state-owned banks, accounting for around seventy-eight percent share of gross NPAs of all banks, have experienced a drop from 11.3% in last year to around 8.7% this year.

“As per the monetary disclosures created by the SCBs, loans written-off accounted for additional 32,000 additions within the quarter concluded December-2020, this has led to improvement within the asset quality (GNPA reduction) of the SCBs. Wherein, SBI  has written off Rs.9,986 crore, followed by Union Bank of India, Bank of Baroda, Axis Bank, IDBI Bank, ICICI Bank, and Kanara Bank,” it said.

And for the asset quality improvement, Care Ratings made it clear that many recoveries were created by banks (SBI: ₹5,657 crores, ICICI Bank: ₹1,776 crores, Union Bank of India: ₹1,554 crores, Bank of India: ₹1,495 crores, Bank of Baroda: ₹1,471 crores, Canara Bank, Indian Bank: ₹744 and Axis Bank: ₹621)

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