Rising bank NPAs: Should you be concerned?

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Rising bank NPAs: Should you be concerned?

If you thought Indian banks got away with very little damage from the global slowdown, think again. The damage by way of bad loans is bigger than apparent earlier.

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If you thought Indian banks got away with very little damage from the global slowdown, think again. The damage by way of bad loans is bigger than apparent earlier. CNBC-TV18's Vidhi Godiawla reports on the default numbers of some big banks.

The pressure of the economic slowdown is beginning to show. Most Indian banks generated substantial fresh non-performing assets in the third quarter.  State Bank of India's gross NPAs rose from Rs 17,376 crore to Rs 18,861 crore. As a percentage of total assets, this is a jump from 2.99% in Q2 to 3.11% in Q3.

Punjab National Bank saw its gross NPAs jump by over Rs 500 crore to Rs 3155 crore. As a percentage of total assets, that's a jump from 1.5% to 1.83%.

Union Bank's gross NPAs, however, rose only marginally to Rs 2,092 crore. PNB and Union Bank attributed the rise in NPAs to farm loans. The government's debt relief scheme expired on December 31, so the both the banks classified their unpaid agriculture loans as NPAs. However, SBI said it would recognise its farm loans as NPAs only in the current quarter.

Bank of Baroda posted good numbers last quarter but still saw its gross NPAs rise by around Rs 300 crore. Bank of India, which saw a big jump in bad loans in Q2, managed to restrict fresh NPAs to around Rs 250 crore. Banking giant IDBI Bank was the worst hit. Its bad loans jumped by over 45% to Rs 2,718 crore last quarter.

Private sector banks on the other hand have fared better. Only Axis Bank saw a marginal rise in bad loans in Q3, from Rs 1,132 crore to Rs 1,174 crore. ICICI Bank and HDFC Bank on the other hand saw their bad loans fall quarter on quarter even though the overall level is still high for the former.