Bad loans in India's private banks expand fivefold in past five years

The sector bore $16.03b in bad loans as of end-March.

India’s bad loan problem has seeped over to the private banking sector as non-performing assets ballooned by a whopping 450% from $2.91b (Rs 19,800 crore) at the end of FY2013-2014 to $16.03b (Rs109,076 crore) at the end of March, according to a report from The India Express.

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ICICI Bank’s NPA levels stood at $1.54b (Rs 10,506 crore) in FY 13-14, but rose to $7.95b (54,063 crore) in FY 17-18. Similarly Axis Bank’s stressed assets rose from $462.54m (Rs 3,146 crore) to $5.04b (Rs 34,249 crore) over the five-year period.

HDFC Bank’s NPAs were $74.03m (Rs 2,989 crore) in FY 13-14 but hit $1.27b (Rs 8607 crore) five years later. Kotak Mahindra, Federal Bank and Yes Bank bad loans in FY 17-18 stood at $562.37m (Rs 3,825 crore), $411.08m (Rs 2,796 crore), $386.24m (Rs 2,627 crore) respectively.

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The surge in NPAs is attributed to a circular issued by the central bank changing the restructuring of stressed assets which entailed tighter disclosure on NPAs, leaving little room for banks to understate their bad loan levels. The country's $1.7t banking sector is saddled by an estimated $210b of problematic loans especially in the power, steel and telecommunications sectors, further aggravated by a string of fraud scandals that caused public sentiment in the financial sytem to plunge to an all time low.