Incremental stress on bank books coming down, says RBI official

Small signs of moderation in asset quality pressure on banks are becoming visible, going by the dip in the amount of loans that got added to the pool of gross non-performing assets (GNPAs) in the quarter ended September.

This addition moderated to about Rs 40,000 crore, from Rs 47,000 crore in the June quarter, first of the current financial year, according to a review of results for 37 listed banks (from both the public and private sectors).

N Vishwanathan, deputy governor, Reserve Bank of India, said: "The basic way we are looking at is that the increment (in stress) is coming down. We are seeing the trend across sectors."

NPAs for these listed banks totalled Rs 6,49,719 crore at end-September, up from Rs 6,09,333 crore at end-June. The pool of bad loans at the end of 2015-16 (March 31) was Rs 5,59,600 crore for the 37 banks.

Public sector bank executives said the fall in addition was small but reflected gradual changes due to a slew of steps to control NPA slippage and support borrowers facing temporary liquidity problems.

State Bank of India head Arundhati Bhattacharya said the outlook for resolution of stressed accounts was improving. Recent amendments to the rules for restructuring schemes like 5/25 will aid recoveries and resolution, she said. SBI's pool of gross NPAs was Rs 1,05,782 crore (7.14 per cent) at end-September. At end-June, this was Rs 1,01,541 crore.

Vishwanathan said the deadline for banks to clean up their balance sheet remained March 2017. However, new RBI governor Urjit Patel had said last month that firmness would be tempered by pragmatism in dealing with bank NPAs, so that the economy did not feel there was lack of credit to support growth.