Banks' bad loans may touch Rs10,00,000 crore in Q4: Assocham

The slowdown in certain important sectors like steel, textiles, aluminium etc, combined with the ongoing asset quality review (AQR), may push stressed assets of banks to Rs10,00,000 crore in the fourth quarter of the current fiscal, says the latest study by industry association Assocham.

"The slowdown in certain important sectors like steel, textiles and aluminium, and the ongoing asset quality review (AQR) may push stressed assets of the banks to Rs10 lakh crore mark in the fourth quarter of 2015-16," the report said.

At the end of December, the total stressed assets (gross NPA plus restructured assets) of all banks stood at Rs8,00,000 crore which is expected to see a significant jump in the current quarter itself, says the study.

While the spike in NPAs of lender banks has been partly due to the AQR undertaken by the RBI, other factors have also contributed to rising bad assets with lenders, it added.

Total stressed assets of banks increased to Rs7,40,000 crore at the end of March 2015 from Rs2,33,000 crore as of March 2011, nearly a four-fold increase.

Gross NPAs surged to Rs4,01,590 crore at the end of December 2015 from Rs2,98,641 crore, a jump of over Rs1,00,000 crore in nine months of the current fiscal.

"Gross NPAs of state-run banks increased from Rs2,67,065 crore in March 2015 to Rs3,61,731 lakh crore in December 2015. In contrast, the private sector banks' Gross NPA rose to Rs39,859 crore at the end of December from Rs31,576 crore at the end of March 2015," an Assocham spokesman said while releasing the report.

In percentage terms, the gross NPA ratio of public sector banks (PSBs) increased sharply from 5.43 per cent as on March 2015 to 7.30 per cent as of December 2015. In the case of private sector banks, the increase was much lower – from 2.20 per cent to 2.36 per cent.

Assocham cited the 60 per cent decline in State Bank of India's advance tax payment to Rs690 crore in the March quarter of 2015-16 from Rs1,749 crore in the last quarter of fiscal 2014-15 as a reflection of the subdued last quarter due to mounting bad loans.

This has been the case of several state-run banks and most of them expect the sluggishness to continue in the fourth quarter as well.

Eleven public sector lenders have reported losses totaling Rs12,867 crore in the third quarter amidst a spike in bad loans.

Bank of Baroda reported a whopping Rs3,342 crore loss, the highest ever quarterly loss registered by a public sector bank. IDBI Bank reported a loss of Rs2,184 crore while Bank of India posted a loss Rs1,505 crore for the quarter ended December.

Besides, UCO Bank reported a net loss of Rs1,497 crore, followed by Indian Overseas Bank (Rs1,425 crore), Central Bank of India (Rs837 crore) and Dena Bank (Rs663 crore).

Kolkata-based Allahabad Bank reported a loss of Rs 486 crore for the quarter while Oriental Bank of Commerce registyered a loss of Rs425 crore, followed by Corporation Bank (Rs383 crore) and Syndicate Bank (Rs120 crore).