NPA level of state-owned banks manageable: Survey

However, wanted close monitoring to avoid adverse impact on their balance sheet

Pointing to sharp rise in bad loans, Economic Survey said the gross non-performing assets (NPAs) of public sector banks are still at manageable level. Yet, they need to closely monitor them to avoid adverse impact on their balance sheet.

The economic slowdown, rise in interest rates and aggressive lending in good times led to sharp rise in bad loans of banks. The switchover to system-based identification of NPAs by state-owned banks also increased tally of stressed assets.

Some industry and infrastructure sectors are experiencing a rise in NPAs due to the slowdown and high levels of leverage.

Overall NPAs of the banking sector increased from 2.36% of total credit in March 2011 to 3.57% of total credit in September 2012.

The sectors particularly under stress include textiles, chemicals, iron and steel, food processing, construction, and telecommunications.

The gross NPAs of PSBs have shown a rising trend in last three years. They rose from Rs 59,972 crore in March 2010) to Rs 1,44,437 crore in September 2012.

Banks have taken steps to address rising NPAs. Banks have appointed nodal officers for recovery at various levels (head offices and zones) and for each Debts Recovery Tribunal (DRT).

There is also thrust on recovery of loss assets. Also they are keeping close watch on NPAs by picking up early warning signals and ensuring timely corrective steps by banks.

They have also designated asset reconstruction companies (ARCs) resolution agents of banks, survey added.

Banks are conducting sector and activity-wise analysis of NPAs. Steps at recoveries are bearing fruits. Recoveries by PSBs which has increased from Rs 9,726 crore as on March 2010 to Rs 17,043 crore as in March 2012.