Indian banks' NPAs likely to go up in FY10: ING Vysya

Indian banks may face rising non-performing assets (NPA) in the next fiscal because of the economic slowdown, financial services major ING Vysya said today.

"We expect the NPA levels of Indian banks to go up to 3.5-4 per cent levels in the next financial year as against 2.5-3 per cent expected in this fiscal," ING Vysya Bank Economist (Financial Markets) Deepali Bhargava told reporters here.

Indian banks have witnessed a sharp increase in their bad loans, especially consumer and credit card loans, in the last one year on account of the impact of global financial crisis in the domestic economy.

Sectors that are likely to witness a surge in sticky assets are real estate, textile and garments and consumer loans, Bhargava said.

Banks are likely to be risk-averse in the case of vulnerable sectors in FY09, which may moderate the credit growth further to 17-18 per cent in FY10, she said.

On the other side, the deposit-base of Indian banks is likely to grow by 16.5 per cent on a year-on-year basis, Bhargava said.