Money & Banking
NPAs of nationalised banks jumped 143% in two years to March 2017
The gross non-performing asset (GNPA) ratio of 13 public sector banks (PSBs) that peaked in December 2016, have remained just about an average basis. However, compared with March 2015, the growth in NPA jumped 143% in March 2017, says a research note.
 
According to Care Ratings, since March 2016, these banks have continued to witness an increase in NPAs with an increment of about Rs50,000 crore in the next four quarters till March 2017. It said, "This increase was spread quite evenly across the four quarters – Rs20,217 crore in Q1, Rs11,128 crore in Q2, Rs8,318 crore in Q3 and Rs10,642 crore in Q4 (see chart below). Compared with March 2015, growth by March 2017 was 143%. These high NPAs have been a major reason for pressure on profitability as they have been making progressively higher provisions on this count."
 
In the report, the ratings agency says, "The indication is that there is a mixed picture for PSBs so far, and while at the aggregate level, it appears to have stabilised, the ratio has come down for fight of the 13 banks which could improve going ahead. For the other five banks, another quarter’s performance would be critical for drawing any conclusion on whether or not the worst is over."
 
According to report, five PSBs, Central Bank of India, Bank of Maharashtra, Dena Bank Andra Bank and Punjab & Sind Bank the NPA continue to at peak levels during March 2017.
 
Care Ratings says, in terms of the Gross NPA ratio (see chart below), there has been a continuous increase from March 2015 onwards, with two sharp spikes witnessed first in December 2015 by 1.5% and then by 2.67% in March followed by 1.17% in June 2016. Subsequently, the NPA ratio has almost touched 12% by December 2016 and remained virtually unchanged by March 2017, it added.
 
 
"The question posed is whether this is a plateau reached by these banks or whether the number could increase in the coming quarters. Some of these banks have reported that they have managed to lower the volume of NPAs at a faster pace than fresh slippages, which is a positive sign for the system as it does indicate that the worst may be behind us," the ratings agency said.
 

The Reserve Bank of India (RBI) had asked banks to complete the process of asset quality recognition by March 2017. "Prima facie there is reason to believe that the numbers should not increase subsequently and whatever is recognized would be more on new loans rather than the existing portfolio. This would hold especially for banks which have recorded lower NPA ratios in March 2017 compared with December 2016," Care Ratings concluded.

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COMMENTS

shushli tiwari

6 months ago

The Reserve Bank of India may put restriction on United Bank of IndiaBSE 2.26 %'s branch expansion and direct it to make higher provisions to cover risks due to its rising stressed loans, Equity tips

shushli tiwari

6 months ago

The Reserve Bank of India may put restriction on United Bank of IndiaBSE 2.26 %'s branch expansion and direct it to make higher provisions to cover risks due to its rising stressed loans, Equity tips

Ashok m Rane

6 months ago

Public Sector Banks r earning ( Making Operating Profit) for the benefit of Bad Borrowers. Obtaining Bank Loans, turning them NPA and getting them written off has become d culture of Businessmen. In d name of Balance sheet clean up thousands of crore NPAs r written off. Unless and untill stringent criminal action is taken against the borrowers this culture will not change. The Graph of Bad Loans will be always increasing. In absence of stringent regulations it is very difficult to make recovery from Big Borrowers. Only small borrowers can be harassed for recovery. Bullying Big Borrowers is just not possible. The Judiciary is also very slow. Hence PSBs should stop granting Bigger Loans and confine their loaning to small borrowers only, to get out of d situation.

SRINIVAS SHENOY

6 months ago

It is hightime the management and the staff in the banking sector work in tandem sincerely on a war footing, to recover the maximum amount of NPAs, which is a drain on the country's economy.

REPLY

Ashok m Rane

In Reply to SRINIVAS SHENOY 6 months ago

Over 70% of Loans are for Big Ticket Borrowers, where recovery by Branch Staff is very difficult. Staff can at the most try recovery of small Loans from Poor Borrowers. Unless stringent action is taken against Big Borrowers, the efforts of Bank Staff will not bear any fruits!

M Veerappa Moily, Chairman of Parliamentary Standing Committee on Finance, assures a discussion on ever-increasing bank charges
M Veerappa Moily, Chairman of the Standing Committee of Parliament on finance assured a group of activists that the issue of ever rising and unfair bank charges would be discussed in detail by the committee. The meeting, which included Mr Dinesh Trivedi (of the All India Trinamool Congress) and Mr TK Rangarajan (Communists Party of India-Marxist) was told how banks have begun to levy a series of unjustified and unconscionable charges on customers, which actually hurt poorer customers at a time when the government is working at financial inclusion, while rich customers with large deposits are not charged. They drew attention to the furore caused by State Bank of India (SBI) decision to charge Rs25 on every single cash withdrawal from SBI Buddy app through ATM.
 
The group, including well known NGOs, trade unions, finance editors and experts presented Mr Moily a 1,100 page print out of over 100,000 signatures to an online petition at Change.org protesting against discriminatory bank charges and demanding action.
 
The group also submitted a Memorandum with seven points and requested that these be addressed urgently. 
 
The meeting was coordinated by Mr Sanjay Nirupam, President, Mumbai Regional Congress Committee and former Member of Parliament. 
 
The Parliamentary Standing Committee on Finance was in Mumbai for meetings with banks, insurance companies and financial institutions on 12th and 13th May. 
 
The group told the Standing Committee that although the Reserve Bank of India requires bank charges to be reasonable, how it refuses to go into the reasonableness of charges and allows banks to operate as a cartel. Since consumers are a disaggregated lot, they are unable to fight back.
 
The group asked for the following key issues to be dealt with urgently. 
 
1. Ensure Digital Safety by converting RBI’s draft circular of August 2016 into a formal Master Circular, thereby limiting customer liability and shifting the onus of proving customer fault to banks. This is in line with international best practices.
 
2. Remove Average Minimum Balance Charges: If a customer’s balance is low, then the bank can downgrade the account to a Zero Balance or No-Frills Account (and reduce services like chequebook facilities etc.). It cannot levy a charge. This is in line with international practices.
 
3. Remove charge on cash transactions, or low value cheques, which discriminates against economically weaker bank customers and students. 
 
4. End Discrimination against old borrowers vis-à-vis New ones for Loans- where new customers are offered significantly lower interest even on floating rate loans.
 
5. Banks must be ordered to stop the discriminatory charge levied to reduce interest rate on floating rate loans. (There is no such charge or delay when interest rates increase).
 
6. Making NEFT (National Electronic Fund Transfer) transactions safe by capturing additional data such as name and branch details and have a robust redress process for inadvertent mistakes. 
 
7. Bank services must have a rational, transparent and non-discriminatory pricing framework for banks based on a detailed costing of all products and services
 
The group of activists who met the standing committee members: Sucheta Dalal, Trustee, Moneylife Foundation; AV Shenoy from the Rashtriya Matadata Manch; Ms Lalita Joshi and Mr Devidas Tuljapurkar, both Joint Secretaries of the All India Bank Employees Association (AIBEA); Harsh Vardhan Roongta, Financial Expert and Advisor; RN Bhaskar, Senior Editor and columnist; Dolphy D’souza, Convener, Police Reforms Watch; DS Ranga Rao, Public Concern for Governance Trust (PCGT); and Yogesh Sapkale, Director (Projects), Moneylife Foundation. Several leading unions and activists have signed and supported the Memorandum on bank charges. 
 

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COMMENTS

Sudharsan R

6 months ago

Pure heavy charges. Minimum balance charges even if we don't have money... Purely sucking public that too an average minimum balance of 500 and 1000 is reasonably OK but 3000 and 5000 is very high in public sector bank SBI

Ravindra Bhat

6 months ago

Hope things fall in place... And arrogance of these banks falls flat. Great initiative from money life...

Suketu Shah

6 months ago

PMO office(not MoF as of today) shd have moneylife advising them directly on suggestions on major changes required in financial/banking,etc sectors in India.Positive results wl be much faster to protect customers.

Mahesh S Bhatt

6 months ago

Good Great Show Money Life. But I donot know how much the will materialise?
Mahesh Bhatt

Jagdish Chavan

6 months ago

Great and timely efforts by MLF.

Simple Indian

6 months ago

A very good initiative taken by MLF. All the points mentioned for action / implementation are justified and will benefit millions of Bank customers who have been forced to put up with the whims n fancies of Banks all this while. Will be good if the concerned Govt Depts/RBI/Banks take note and implement the same at the earliest.

SRINIVAS SHENOY

6 months ago

With such a promising start and adequate backing, hope our objective of having reasonable charges levied, for all financial transactions, as per international practices by banks is met. Hope a vigorous follow up action of recovery of bad loans follows in a great way.

SRINIVAS SHENOY

6 months ago

With such a promising start and adequate backing, hope our objective of having reasonable charges levied, for all financial transactions, as per international practices by banks is met. Hope a vigorous follow up action of recovery of bad loans follows in a great way.

SRINIVAS SHENOY

6 months ago

With such a promising start and adequate backing, hope our objective of having reasonable charges levied, for all financial transactions, as per international practices by banks is met. Hope a vigorous follow up action of recovery of bad loans follows in a great way.

ksrao

6 months ago

At a time when the government is thinking of extensive use of digitisation for all financial transactions, banks' increasing and imposing charges is just anti-national.

ICICI Bank reduces home loan rates by 30 bps
Private sector lender ICICI Bank on Monday said that it has reduced interest rates by up to 30 basis points (bps) for home loans of up to Rs 30 lakh.
 
"With this reduction, salaried borrowers can avail home loans at among the lowest rates in the industry. Salaried women borrowers will get home loans at 8.35 per cent and others at 8.40 per cent," the private sector lender said in a statement. 
 
According to ICICI Bank, customers from economically weaker section (EWS) and low income group (LIG) can avail the dual benefit of low interest rates and credit linked subsidy under the Pradhan Mantri Awas Yojana.
 
Commenting on the initiative, ICICI Bank Managing Director and Chief Executive Officer Chanda Kochhar said: "ICICI Bank is committed to support the government's vision to provide housing for all by 2022. In line with this commitment, we have reduced the home loan interest rates for the affordable housing segment."
 
On May 8, the country's largest home loan provider State Bank of India (SBI) announced a reduction in the home loan rates by 25 bps from 8.60 per cent to 8.35 per cent per annum.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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