State banks are still not out of the woods

SBI cuts savings deposit rate to 2.75% lower lending rates Employees24 Feb 2020: State banks are still not out of the woods, as many sectors like agriculture, MSME, commercial vehicle, telecom and real estate are facing new stress in the third quarter of fiscal 2019.

Farmers in Uttar Pradesh, Maharashtra, Tamil Nadu and Punjab were given loan waivers which resulted in the addition of Rs.60,762 in gross bad loans to the books of SBI, Punjab National Bank, Bank of Baroda and Bank Of India. Consequently, their non-performing agriculture credit rose by 30%. Also, gross bad loans in MSME sector rose 6% to Rs.66,280 crore.

After a disappointing fiscal 2019, the data damp expectations that state banks had against the recovery of bad loans pushed them into losses despite the fact that they had cut bad loans and reported improved financial performance in the first half of fiscal year.

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