Banking sector asset quality declines as Basel III deadline nears
31 December 2012
Gross non-performing assets (NPAs) of public sector banks have gone up by 90 basis points in the 2011-12 financial year, reflecting a general deterioration of banks' assets.
However, an improvement in the performance of foreign and private sector banks helped contain overall deterioration of NPS at 60 basis points for the commercial banking system as a whole.
Both gross NPAs and net NPA and slippage ratios (fresh gross NPAs as a fraction of opening gross standard advances) have gone up according to the latest RBI report on 'Trend and Progress of Banking in India (2011-12)', which cites annual accounts and off-site data.
According to the report, fiscal 2011-12 aggregate loans and advances grew at a slow pace of 17.4 per cent against 22.3 per cent in 2010-11 and 19.6 per cent in 2009-10.
The ''asset quality of banks reflects the efficacy of banks' credit risk management and the recovery environment'', the report said.
The more worrying fact is the widening adverse gap in gross advances and gross NPAs over the five-year trajectory, which in turn complicates an already constrained fiscal position, the report pointed out.