State banks are still not out of the woods

state banks24 Feb 2020: The State bank of India is 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. The aggressive recovery of bad loans helped India’s largest lender record Rs 5,583 crore net profit last December, its highest ever quarterly profit.

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 the 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 even tho they had cut bad loans and reported improved financial performance in the first half of the fiscal year.

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