The Hindu Business Line : NPAs continue to haunt banks

THE bugbear of non-performing assets continue to haunt public sector banks. In fiscal 2001-02, twenty-four public sector banks added Rs 11,180 crore of gross non-performing loans. That was almost twice the profits of Rs 5,675 crore that the 24 banks had recorded during the previous fiscal.

The slippage of Rs 11,180 crore represent a 30 per cent deterioration in non-performing loans that were there at the beginning of April 2001.

The point to note is that this slippage comes after around Rs 7,000 crore of loan assets (mainly standard assets) has been restructured. The Reserve Bank of India had permitted banks to restructure loans given to corporates as the economy was going through a downturn during the past two to three years. The idea behind allowing such restructuring which involve some temporary sacrifice on the part of the banks is to expedite the revival of the troubled unit. But for this restructuring, the slippage ratio may have well crossed 50 per cent.

Many banks made good use of the mechanism provided for restructuring of loans. For instance, Punjab National Bank restructured loans worth Rs 603.80 crore in 2001-02 compared to Rs 297.20 crore in 2000-01.

Similarly, Allahabad Bank restructured loans worth Rs 424.58 crore in 2001-02 compared to Rs 167.50 crore previously, while Indian Overseas Bank restructured loans worth Rs 372.44 crore compared to Rs 47.81 crore previously.

Banks managed to reduce their gross NPAs during the year by around Rs 8,807 crore during the last fiscal. Reductions happen through cash recoveries, write offs or upgradation of accounts from non-performing to performing.

Bankers are among those praying fervently for an economic recovery to enable them to keep the NPA problem under control in the coming fiscal.

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