Banks' NPAs up 26 per cent in Q2; CAR improves by 1.6 per cent: Assocham
10 Nov 2009
Non-performing assets (NPAs) of commercial banks in the country rose 26 per cent in the second quarter of the current financial year (July-September 2009-10) even as banks' capital adequacy ratio (CAR) improved by 1.6 per cent during the quarter, apex industry body Assocham said.
While the increase in CRR reported by commercial banks are an indication of their financial strength, Assocham said, the second quarter results of Indian banking sector portray a mixed picture.
"Improvement in CAR reflects better financial health of banks and government recent move to recapitalise weak PSUs bank is a right move while increase in NPAs is a matter of concern as it directly affects the solvency and profitability of banks," Assocham said in a release.
The increase in NPA should inspire government to quickly move towards consolidation of banks as it will bring down their risks and expand banks balance sheet size to global standard, helping them to take on emerging challenges in the financial sector, Assocham president Swati Piramal said.
"Solvency analysis of Indian banking sector as carried out by Assocham reveals that on an average 26 per cent rise in net non-performing assets (NPAs) have been registered by 21 public sector and commercial banks during the second quarter of the FY'10 as against Q2-FY'09," she said.
As per the Assocham analysis, the aggregate net non-performing assets of the 21 banks increased to Rs25,137 crore in second quarter of FY'10 from Rs19,920 crore in the same period of FY'09.
