Non-performing assets of public sector banks rose to Rs 1,11,664 crore in 2012 from Rs 52,807 crore in 2003, data from the Reserve Bank of India said.
"The asset quality of banking system has deteriorated significantly during the year 2011-12 after a period of sustained improvement. Inadequate credit appraisal during the boom period of 2003-07 coupled with the adverse economic situation in the domestic as well as the external front resulted in the current increase in NPAs," RBI said.
The non-performing assets (NPAs) of country's bank SBI and its associates in 2012 (as of March 31) were at Rs 45,695 crore from Rs 16,958 crore in 2003, while that of nationalised banks' were at Rs 65,969 crore versus Rs 35,849 crore.
Priority sector contributed to largest share of NPAs at Rs 23,911 crore (52.33%), non-priority sector Rs 21,759 crore (47.62%) while public sector NPAs Rs 25 crore (0.05%) as of March 31, 2012 for State Bank of India and its associates.
Gross NPAs (including SBI and its associates and nationalised banks) from the priority sector stood at Rs 56,201 crore as of March 31, 2012. Non-priority sector Rs 55,246 crore and public sector Rs 217 crore, showed the data.
RBI said the spurt in NPAs could be attributed to deterioration in asset quality of the banks, the slowdown prevailing in the domestic economy as well as inadequate appraisal and monitoring of credit proposals.
"The deterioration in asset quality was more pronounced in the case of public sector banks. During 2011-12, the gross NPAs of public sector banks increased at a higher rate as compared with the growth rate of NPAs at a system-level."
The asset quality of banks is an important indicator of their financial health and it reflects the efficacy of banks' credit risk management and the recovery environment.
To strengthen the NPA management framework of the banks, the RBI its in 2012-13 Monetary Policy has advised the banks to put in place a robust mechanism for early detection of signs of distress, and implement measures to preserve the economic value of assets.
It has also asked the banks for a proper system-generated segment wise data on their NPA account.