Gujarat banks' bad loans rose by 2% in just 9 months

AHMEDABAD:

Banks

in

Gujarat

have reported a steep rise in their non-performing assets (NPAs) by the quarter ending December 31, 2015. In just nine months of the current financial year, the NPAs of banks in Gujarat have grown by more than 2% (Rs 9216 crore) --from 3.45% (Rs 13,353 crore) in March 2015 to 5.48% (Rs 22,569 crore) in December 2015.
According to the Reserve Bank of India (RBI), an asset becomes non-performing when it ceases to generate income for the bank. The banks need to declare a loan as NPA if repayments remain overdue for more than 90 days.

NPAs stood at 5.48% of the total advances made by the banks by the quarter ending December 31, 2015. This revelation comes at a time when the central government has proposed to infuse Rs 25,000 crore capital in public sector banks to bail them out of crises caused by bad loans.

The latest report of State Level Bankers' Committee (SLBC) says that the gross advances of banks in Gujarat totalled Rs 4,13,551 crore while their gross NPA was Rs 22,569 crore -that is, 5.48% of the total advances -by the quarter ending December 31, 2015.

Bank officials and finan cial experts believe that slackness in the economy and the overall slowdown has led to the rise in NPAs.

“Power and steel sectors are facing a slowdown. The entire banking industry is under stress because of the current financial environ ment. This is leading to loan accounts turning into NPAs,“ said an SLBC offici al.

Aspy Bharucha, a finan cial consultant, said there are two types of defaulters -wilful defaulters and those who become defaulters due o slow industrial growth “In the last two years, due to he slump there has been an ncrease in the defaulters o he second type as they were not able to generate income o repay loans,“ said Bharu cha. He further said that exports had slowed down over the last one year. “This has affected the textile industry in the state. Chemicals and dyestuff sector, automobile industry and MSMEs are bearing the heat of the slowdown resulting in more NPAs,“ Bharucha said.

Meanwhile, the overall bank deposits in the state grew by 10.22% (or Rs 48,118 crore) to Rs 5.189 lakh crore in the quarter ending December 2015. In the quarter ending December 2014, the total bank deposits in the state was Rs 4.70 lakh crore .

The gross advances made by the banks in the state stood at Rs 4.13 lakh crore in December 2015 compared to Rs 3.69 lakh crore in December 2014, an increase of 11.99% (or 44,268 crore).