Volume of bad debts is huge and concealed in books till now. Asset quality cannot improve by manipulating and fraudulently concealment of bad assets.
Actual reduction in slippages cannot be stopped until process of lending , monitoring ,system of fixing credit targets and building pressure for achieving credit target is changed, until political exploitation is stopped completely and until legal and administrative system become active and effective to help in recovery of loans from defaulters.
Quality of loan assets cannot improve until bank officers learn to say NO to bad proposals and until they discard greed for bribe and undue favour from loan seekers.
Public sector banks cannot perform better until Government use them as their tool to enrich vote bank.
If GOI want to use PS banks as tool to help poor, common men and business houses and to save farmers and industrialists from money lenders they will have to stop comparing performance of PSBs with that of private banks .
GOI will have to stop losses caused to various PSBs due to inter bank unhealthy competition and force them to follow uniform interest rate policy and to boost the moral of real honest performers instead of giving award to flatterers and bribe earners. After all various PSBs are organs of same government and their survival depends of capital support from same government.
GOI will have to give a considerably good hike in wages of bank staff to boost up their moral and to make them fully devoted to quality and quantity of assets.
Bank staff are crying for respectful wage hike for more than 26 months , but GOI have got no time to look into the casual attitude of Indian Bank's Association. This has caused much frustration to bank staff . Overall impact is negative.
GOI cannot be and should not be so much casual in dealing with Bank staff who take part wholeheartedly in all national programme despite manpower constraints.
Even after working 12 hours a day , if pay package of an officer is less than clerk of central government departments and that of clerk is less than pay of a peon in central services, one cannot expect good result from PS banks in such environment.
GOI has not even bothered to take punitive or corrective action against administrative officials , police officials, court judges, advocates and others who indirectly support defaulters of bank and cause inordinate delay in disposal of bank cases filed in courts.
GOI has failed to stop politicians using PS banks for lending to their kith and kin and in lieu of that promote an bank officer for the post of ED or CMD.
GOI could not fix accountability on top officials of banks, RBI directors, CA directors ,members of Boards and other VIPs who join hands in sanctioning of loan to bad individuals .
GOI could not stop and punish team of Chartered Accountants, valuers, legal officials, Team of rating officials who in nexus with borrowers give certificate of good health and submit fabricated financial statements .
After all who will bell the cat ? Who will take the responsibility when a loan becomes NPA? Should we leave all bad officials and wrong reason for cases of bad loan be accepted all the time?
We cannot dream of credit discipline until bank and GOI learn to identify intention of all officials involved in sanction and monitoring of loans and learn to identify the person behind any bad loan and until some of them are booked to task .
PSBs generate Rs 21,700 cr bad loans in three months-Financial Express -22.02.2015
By: George Mathew
Asset quality pressures continue to take a heavy toll of public sector banks’ performance with non-performing assets (NPAs) jumping Rs 44,500 crore to Rs 2,72,700 crore, or 5.1 per cent of the gross advances, as of December 2014 as against Rs 2,28,200 crore during December 2013.
An analysis of bank results shows that PSU banks generated bad loans of Rs 21,700 crore during the October-December period alone. Further, 6.5 per cent of PSU banks loans were standard resturctured advances as on December 31, 2014.
This means 11.6 per cent, or around Rs 6,38,000 crore — which is more than enough to cover India’s fiscal deficit — of the loan portfolio of PSU banks are considered as stressed assets.
On the other hand, private banks’ gross NPAs and restructured advances were around 2.1 per cent and 2 per cent respectively, as on December 31, 2014, largely unchanged from the September 2014 levels.
While SBI’s NPAs came down to 4.90 per cent (Rs 61,991 crore) of gross advances as against 5.73 per cent (Rs 67,799 crore) in the same period of last year, the asset quality other leading PSU banks worsened.
Punjab National Bank, the second largest PSU bank, reported a sharp fall in NPAs at 5.97 per cent (Rs 22,211 crore) from 4.96 per cent (Rs 16,595 crore).
Indian Overseas Bank showed NPAs of Rs 14,500 crore (8.12 per cent) as against Rs Rs 9,168 crore (5.27 per cent) last year. Union Bank NPAs rose to Rs 12,596 crore (5.08 per cent) from Rs 8,776 crore (3.85 per cent).
Bad loans are expected to increase significantly in the next fiscal following withdrawal of regulatory forbearance on debt restructuring by the Reserve Bank of India. Gross NPAs could rise to 5.1-5.7 per cent by March 2016 from 4.5 per cent as in December 2014.
However, total stressed advances (gross NPAs plus standard restructured advances) could moderate in fiscal 2016 with economic activity picking up and the Reserve Bank’s norms for flexible structuring of loans to operational projects reducing the flow of impaired assets, says rating firm ICRA.
The overall stress in the banking system is likely to decline with higher economic activity, lower inflation, falling interest rates, and the likely resolution of fuel linkage and other impediments in the infrastructure sector, it says.
This may also support higher credit growth (from the current 11 per cent levels) and lower fresh stressed-asset formation (now at 4.6-4.8 per cent) over the medium term.
While recoveries and upgrades of bad loans dropped considerably in Q3, the NPA generation rate was largely unchanged at 3.3 per cent for PSU banks (3.7 per cent for nationalised banks and 2.4 per cent for SBI).
Fresh non-performing asset generation of PSU banks was impacted by higher slippages from restructured accounts (around 25 per cent of new NPAs generated during the third quarter).
An analysis of bank results shows that PSU banks generated bad loans of Rs 21,700 crore during the October-December period alone. Further, 6.5 per cent of PSU banks loans were standard resturctured advances as on December 31, 2014.
This means 11.6 per cent, or around Rs 6,38,000 crore — which is more than enough to cover India’s fiscal deficit — of the loan portfolio of PSU banks are considered as stressed assets.
On the other hand, private banks’ gross NPAs and restructured advances were around 2.1 per cent and 2 per cent respectively, as on December 31, 2014, largely unchanged from the September 2014 levels.
While SBI’s NPAs came down to 4.90 per cent (Rs 61,991 crore) of gross advances as against 5.73 per cent (Rs 67,799 crore) in the same period of last year, the asset quality other leading PSU banks worsened.
Punjab National Bank, the second largest PSU bank, reported a sharp fall in NPAs at 5.97 per cent (Rs 22,211 crore) from 4.96 per cent (Rs 16,595 crore).
Indian Overseas Bank showed NPAs of Rs 14,500 crore (8.12 per cent) as against Rs Rs 9,168 crore (5.27 per cent) last year. Union Bank NPAs rose to Rs 12,596 crore (5.08 per cent) from Rs 8,776 crore (3.85 per cent).
Bad loans are expected to increase significantly in the next fiscal following withdrawal of regulatory forbearance on debt restructuring by the Reserve Bank of India. Gross NPAs could rise to 5.1-5.7 per cent by March 2016 from 4.5 per cent as in December 2014.
However, total stressed advances (gross NPAs plus standard restructured advances) could moderate in fiscal 2016 with economic activity picking up and the Reserve Bank’s norms for flexible structuring of loans to operational projects reducing the flow of impaired assets, says rating firm ICRA.
The overall stress in the banking system is likely to decline with higher economic activity, lower inflation, falling interest rates, and the likely resolution of fuel linkage and other impediments in the infrastructure sector, it says.
This may also support higher credit growth (from the current 11 per cent levels) and lower fresh stressed-asset formation (now at 4.6-4.8 per cent) over the medium term.
While recoveries and upgrades of bad loans dropped considerably in Q3, the NPA generation rate was largely unchanged at 3.3 per cent for PSU banks (3.7 per cent for nationalised banks and 2.4 per cent for SBI).
Fresh non-performing asset generation of PSU banks was impacted by higher slippages from restructured accounts (around 25 per cent of new NPAs generated during the third quarter).
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