Punjab National Bank has the largest share.
Financial Services Secretary Rajiv Takru said banks were trying to make a distinction between wilful defaulters and those genuinely stressed.
Total income on a standalone basis increased to Rs 1,74,972.96 crore.
While selling NPAs, banks are also directed to work out the net present value of estimated cash flows in case of realisation of these assets. The sale price should generally not be lower than the net present value, RBI said.
They also warned that banks will start reporting higher non-performing assets after September, once the six-month moratorium on loan repayment ends.
Mark-to-market risks to the Indian banking sector are limited and manageable, says RBI
While a serious damage to the banking system and the economy has been averted, the episode brings in front the hollowness of the reporting structure in banking.
Seek permission to issue tax-free bonds.
The bank's gross non-performing assets rose to 5.56 per cent of total advances at the end of June, against 4.99 per cent a year ago, reflecting the impact of slowing economy.
Leveraged balance sheets expose banks to sudden shocks.
While banks are not as exposed as the corporate sector during the initial stage of the pandemic, the strain on lenders could ultimately be profound. Banks face a second-order hit compared with the corporate and household sectors.
ICICI Bank reported good results for the October-December 2023 quarter (Q3), with 24 per cent year-on-year (Y-o-Y) growth in profit after tax (PAT). Net interest margin (NIM) dropped 10 bps quarter-on-quarter (Q-o-Q) to 4.43 per cent. Credit growth was at 19 per cent Y-o-Y (4 per cent Q-o-Q), while deposit growth was at 19 per cent Y-o-Y (3 per cent Q-o-Q).
The amount of banks' non-performing assets (NPAs) or bad loans brought into the market for sale has more than doubled in the past four years.
'It is nice that the banking system is in good shape.' 'It is a little early to call it too good because I think it was too bad in the past.'
As their non-performing assets have risen sharply even as loans have remained stagnant, RBI steps in with stringent loan-management measures.
So far this financial year, bank advances grew 10.7 per cent.
Rising non-performing assets are a biggest concern for India's PSU banks.
Jaitley said there was a need for the banking sector to fund infrastructure and manufacturing sectors to support the ambitions of higher growth.
Public sector banks' cumulative profit crossed the Rs 1 lakh crore-mark in the financial year ended March 2023, with market leader State Bank of India (SBI) accounting for nearly half of the total earnings. From posting a total net loss of Rs 85,390 crore in 2017-18, the Public Sector Banks (PSBs) have come a long way as their profit touched Rs 1,04,649 crore in 2022-23, according to an analysis of their financial results. These 12 PSBs witnessed 57 per cent increase in total profit compared to Rs 66,539.98 crore earned in 2021-22.
Ten years after Kingfisher Airlines was grounded, its former employees continue to wait for their dues. On Monday, the Supreme Court awarded a four-month sentence to the grounded airline's flamboyant owner Vijay Mallya in a contempt case. The apex court also ordered him to deposit $40 million plus interest in four weeks to avoid attachment of his properties.
The critical task facing Indian banking is to quickly improve the risk-assessment capability of the state-owned banks, which account for three-quarters of all banking; and if that fails, then to privatise them.
The Finance Ministry on Friday cautioned banks to be on guard for subversion of lending processes by some "undesirable parties", as in the case of the recent bribes-for-loans scandal, in the context of the "burgeoning" non-performing assets of some lenders.
The country's largest lender SBI on Friday reported an 80 per cent surge in standalone net profit at Rs 6.450.75 crore for the fourth quarter ended March 2021, aided by decline in bad loans. State Bank of India (SBI) had registered a profit of Rs 3,580.81 crore during January-March period of 2019-20, the lender said in a regulatory filing. Total income of the bank during the March quarter of the last financial year rose to Rs 81,326.96 crore, from Rs 76,027.51 crore in the same period of 2019-20.
Dream hillstation project Lavasa, near Pune, is now a millstone around lenders' neck.
Canara Bank has put on hold its plan to sell non-performing assets with realisation value of around Rs 250 crore (Rs 2.5 billion) after lukewarm response from asset reconstruction companies (ARCs).
Professional services firm PricewaterhouseCoopers is close to arranging the first acquisition of a non-performing asset in India.\n\n\n\n
Asset Reconstruction Companies, set up to assist banks and financial institutions in reducing their non-performing assets pegged at over Rs 90,000 crore (Rs 900 billion), are all set to start operations shortly.
Both Jet Airways and Go First have met with a similar fate of landing up in insolvency, albeit for different reasons. Whether Go First will be able to avoid the sharp erosion in value like in the case of Jet, experts say, will depend on how quickly it is able to restart operations and retain its slots at airports. Go First, owned by the Wadia group, filed for voluntary corporate insolvency resolution on May 2 due to inadequate capacity utilisation that led to a cash crunch.
The banking sector emerged as an outlier when the rest of India Inc witnessed a slowdown in earnings in FY23. The combined net profit of listed public and private sector banks was up 39.4 per cent year-on-year (YoY) last financial year and their share in India's gross value added (GVA) or gross domestic product (GDP) at factor cost rose to a record high of nearly 1 per cent up, from 0.8 per cent a year ago. Listed banks' combined net profit grew to Rs 2.36 trillion in FY23, from Rs 1.69 trillion a year ago. In comparison, India GVA at current prices was up 15.2 per cent YoY at Rs 247 trillion in FY23; it was around Rs 214 trillion a year ago.
The Reserve Bank has found gaps in banks' corporate governance despite issuing guidelines on the matter, Governor Shaktikanta Das said on Monday. Addressing directors of bank boards, Das said such gaps, which have been mitigated, could have caused "some degree of volatility". He also hit out strongly against "smart accounting" to conceal stress and bloat financial performance.
He said the impact of the second wave of COVID-19 has waned by August,and economic growth will be better from the second quarter onward on a sequential basis. Speaking at an event organised by The Indian Express and Financial Times, Das said the RBI has decided to give more emphasis on growth because of the pandemic and operate in the 2-6 per cent inflation band set by the government for it. The central bank will seek to gradually move towards achieving the 4 per cent target over a period of time, he said, adding that the possibility of a sustained increase in inflation is unlikely.
Modi said that for nearly one and a half years he has been putting in place details of new schemes to give new pace to the country's development and curb poverty.
Need to conserve profits to strengthen the capital base is driving the effort.
>It's not easy to predict the market. But there are at least two positive factors to back the PSU banks, explains Tamal Bandyopadhyay.
In a new report, the agency said the gross non-performing assets for the sector will rise to around 4 per cent on an asset size of over Rs 5,50,000 crore by March 2009, as against 2.7 per cent at the end of March 31, 2007. The rise in bad debt will translate into more losses for lenders.
