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LENDING & CREDIT | Cesar Tordesillas, India

India's bad loans up 54% in March

NPAs of Indian banks rose by 53.5% from Rs 39,200 crore as of March 2011 to over Rs 60,100 crore on March 2012.


Of the 28 top banks which have announced their results, the rise in net non-performing assets during the last quarter over the previous quarter was 3.5%, an analysis by Angel Broking showed.

One of the main reasons for this sharp jump in NPAs is the loans due to state electricity boards and also Air India. On the sectoral front, metals, textiles and infrastructure sectors were among the major ones to contribute to this slide, banking analysts said.

A recent report by PwC India pointed out that while these sectors are under pressure, "banks are also wary of lending to other troubled sectors like aviation, telecom and power, to which they already have sizeable exposure."

The good news, according to analysts, is that going forward NPA levels are expected to come down. This is because a large number of loan accounts have turned bad because of technical reasons, which is NPA recognition by the core banking solutions, and going by previous experience a substantial chunk of these loans will be recovered soon.

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