Ten out of 25 listed commercial banks now have less than 1 per cent of their advances in non-performing assets (NPAs). In March 2005, there were only four banks with an NPA level less than 1 per cent.
In June 2005, the number rose to seven. In the next quarter, it rose further to eight and finally to 10 during the quarter ended December 31, 2005. This means 40 per cent of the listed commercial banks have their net NPA below 1 per cent.
Bankers said the robust growth of the economy contributed to the rise in quality of assets. With the secular decline in the net NPA level, the number of banks with an NPA level of less than 1 per cent has been growing by leaps and bounds.
Listed commercial banks have brought down their net NPA to 1.28 per cent during the nine months ended December 2005. In the beginning of 2005-06, the net NPA of the banking sector was 1.96 per cent. Bankers are hopeful of bringing it down further to close to 1 per cent by the year-end.
In 2001, the net NPA of 25 listed banks covered by this study was as high as 6.27 per cent. The net NPA of the listed banks has declined steadily in the first nine months of the current financial year.
From 1.96 per cent on March 31, 2005, it came down to 1.87 per cent on June 30 and 1.56 per cent on September 30. In the nine-month period, advance portfolios of these banks collectively rose from Rs 7,63,112 crore (Rs 7,631.12 billion) to Rs 10,11,840 crore (Rs 10,118.40 billion).
The banking sector has not been having fresh NPAs in significant quantity. The gross NPA level of these banks, which was well over Rs 50,000 crore (Rs 500 billion) in financial year 2001, has declined to around Rs 40,000 crore (Rs 400 billion) in the nine months ended December 2005.
With the corporate sector making healthy profits over the last three years, banks have aggressively been recovering their sticky assets.
The net NPA of listed banks declined by around Rs 10,000 crore (Rs 100 billion) between 2000-01 and 2004-05 and further by over Rs 3,800 crore (Rs 38 billion) in the first nine months of the current financial year.
Quarterly data show that net NPA of 25 banks studied here declined by Rs 3,842 crore (Rs 38.42 billion) to Rs 12,936 crore (Rs 129.36 billion) in the nine months in review.
