Bank Bad loans to rise to Rs. 9 lakh crore
Sources stated that the bad bank loans in the country are set to increase by 50% to over Rs. 9 lakh crore by March 2017. Reportedly, the situation in the power, steel, textiles and shipping sectors would be particularly worrisome, and solutions are yet to be implemented. These four sectors take up about Rs. 10 lakh crore in bank credits.
What are bad loans?
A bad loan refers to that amount which was borrowed by an individual or an organization, and has not been repaid to the creditor.
Bad debts amount to Rs. 1.14 lakh crore
Earlier this year, the RBI disclosed that 29 state-owned banks in India had written off nearly Rs. 1.14 lakh crore of bad loans during the period 2013-2015. Reports showed that while bad loans for the banks stood at Rs. 15,551crore in 2012, the numbers had tripled to touch a whopping Rs. 52,542crore by March 2015. The data reflects a rise of almost 60%.
Top 5 banks to write-off loans
Between 2013 and 2015, SBI was reported to have written off the maximum bad debts, amounting to Rs. 40,084crore. Punjab National Bank wrote off Rs. 9,531crore, IOB around Rs. 6,247crore, Bank of India around Rs. 4,983crore and Bank of Baroda had written off Rs. 4,884crore.
India's bad loans pitched to see worse days
This year, with the RBI completing the audit for all 50 banks in the country, reports revealed the increasing amount of bad loans facing the country. The banks had disclosed bad debts nearing $131 billion, or an astounding 14% of the total money lent. The reports also suggested that the number could dip further, and another $36 billion may be added to the total.
India's mounting bad loan issue
With India's many banks reporting their recent financial results, the earnings posted have suffered greatly with the rising amount of bad loans affecting the asset quality of the banks. Data comparing India's bad debt ratio showed that the country stands seventh globally for non-performing loans. Amongst Asia-Pacific's largest banks, Indian banks were also reported to post the worst non-performing loans (NPA) ratio.