Rs 1.53 Million Bad Loan Write-off Gives NPA Banking Profile a New Look – The New Indian Express

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Express News Service

NEW DELHI: Indian banks have written off Rs 1.53 million in loans in 2020-2021 to show the decline in non-performing assets (NPA) in their ledgers, calculations based on figures published by individual banks have shown. This is the second highest amount of loans written off for the fiscal year in the last decade, after a record write-offs of Rs 2.54 million in 2018-19.

First, loans that have been bad for many years are eliminated from banks’ balance sheets through write-offs, and corporations make up the bulk of these loans. The gradual decline in recovery is worrying. For example, in 2020-2021, refunds of Bank of India and Bank of Baroda decreased by 37% and 7%, respectively. Likewise, refunds and upgrades for ICICI Bank cost Rs. Rs 6,463 crores, down 15.7% from FY20.

Meanwhile, in the fourth quarter of fiscal year 21, write-offs were quite high, accounting for 55.65% of the total bad loans written off during the year.

This is primarily because lenders admitted bad loans for the first time in the quarter following a nationwide lockdown last year. Initial estimates showed that as of December 2020, banks were sitting on unrecognized bad loans of Rs 1.2-1.4 million, which were only revealed after the Supreme Court’s ruling to suspend asset classification was overturned.

Yes Bank saw the sharpest increase in write-offs, reaching Rs 17,208 crores in fiscal 21, up from Rs 6,358 crores in fiscal 20. Axis Bank (Rs 13,906), Bank of India (Rs 8,732), DCB Bank (Rs 126), Central Bank of India (Rs 5,992), Karnataka Bank (Rs 1,153) and IDBI Bank (Rs 8,392) were among other banks with higher write-offs in fiscal 21.

However, only a few banks managed to cut write-offs every year. This includes Punjab & Sind Bank, where the total loan write-offs were only Rs. Rs 70.51 crores in fiscal year 21, 96% less than Rs 1,781 crores a year ago. SBI alone wrote off around Rs. Rs 34,403 crores of bad loans for the year ended March 2021, albeit less than Rs. 52,387 in FY20. In addition, the National Bank of Punjab (PNB) has written off loans worth Rs. Rs 15,877, Bank of Baroda (Rs 14,878), ICICI Bank (Rs 9,608), UCO Bank (Rs 9,411), Karur Vysya (Rs 1,719), IndusInd Bank (Rs 1,602) and Kotak Mahindra Bank (Rs 625 crores) ) in financial year 21.

Explaining the trend towards bad credit, Madan Sabnavis, chief economist at Care Ratings, said that banks’ gross NPA rose sharply by 43.7% compared to rupees. 7.1 lakh crore in March 2017 to reach Rs. By the end of March 2018 – 10.2 million rupees. But after fiscal 2018, NPAs were moderated and reached Rs 8.9 million by the end of March 2020, thanks to a high rate of write-offs and lower late payments. Public Sector Banks (PSBs) have recorded significant reductions in their gross NPA over the past couple of years and are expected to be around Rs 6 million by the end of March 2021, up from Rs 6.8 million at the end of March. 2020. Gross NPA of Private Sector Banks (PVBs) remained at around Rs 2 million crore from September 2017 to September 2019. In contrast to PSBs, PVBs recorded an increase in gross NPA from Rs 1.8 million in March 2018 to more than. Level 2 lakh crores in December 2019. By the end of March 2021, this figure is expected to decline slightly to around Rs 1.96 crore.

During the quarter ended March, banks saw an improvement in their gross NPA. Despite the inclusion of formal bad loans, the gross NPV ratio of PSBs disclosing data for the 21 fiscal years was 9.63 percent, compared with 10.93 in the fourth quarter of fiscal 2020, while for private credit institutions it was 4.19. percent compared to 4.34 percent in the corresponding quarter last year. However, subsequently, the GNPA ratio increased from 3.4 percent and 9.21 percent for private banks and state-owned banks, respectively.

After the transfer of probable rupees. Rs 89,000 (Phase 1) of 22 strained accounts for the proposed National Asset Reconstruction Company Limited has been fulfilled and will be recorded in the books at the end of FY21, with the projected overall NPA declining. However, stress will continue to be present in the banking system.

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