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India’s bad loan situation for banks now stabilising, says report

PW Bureau 

While there have been improvements in the growth of credit and deposits in the economy, banks’ net profits still remain under pressure, a report said  New Delhi: An analysis of the third fiscal quarter earnings suggests that non-performing assets (NPAs) are stabilising in the country, indicating an improvement in the asset quality of Indian banks. While there have been improvements in the growth of credit and deposits in the economy, banks’ net profits still remain under pressure, a CARE Ratings recent report said. The report also pointed at the progress in credit to industry and services on a year-on-year basis for December last year, as compared to December 2017. Slowing down from the double-digit growth of 30.4 percent in Q3 FY18, gross NPAs increased at 8.4 percent in the same quarter the following year, the report said. This could be because of lower incremental NPAs being generated. The report states that it is still unclear if all legacy NPAs have been recognised by all banks.

Goyal credits IBC process

Finance Minister Piyush Goyal lauded the Modi administration in his Budget speech earlier this month, saying that Rs 3 lakh crore has been recovered through the Insolvency and Bankruptcy Code (IBC) process. “IBC has institutionalised a resolution-friendly mechanism which is helping in the recovery of NPA loans while preserving the underlying businesses and job,” he said. Citing the recapitalisation of Rs 2.6 lakh crore and the merger of banks, Goyal also pointed out that there was an improvement in the financial health of state-run banks. Growth in credit to services increased significantly, but it remained marginally lower to agriculture and allied activities during the period. Moreover, personal loans (retail) have registered a double-digit growth showing improved consumption in the country, the report said.