NPAs in Gujarat MSMEs almost doubles to 6.93% in FY16

Non-performing assets (NPA) in Gujarat rose to 5.92% at Rs 25,000 crore in 2015-16 as against 3.45% at Rs 13,353 crore in the previous year. The rise in NPAs was led by micro, small and medium enterprises (MSMEs) which saw NPAs almost double to close to 7% from the previous year's 3.50%. According to bankers, this was on account of the cotton ginning industry which was the most affected sector in FY2015-16.
 
“Continued moderation in economy hit the MSME most during the year which has reflected in NPA figures. Cotton ginning industry was the most affected sector last year.” said Vikramaditya Singh Khichi, convener of SLBC Gujarat.

 
According to a State Level Bankers’ Committee (SLBC) Gujarat report, MSME’s NPAs reached 6.93% during FY2016 as against 3.50% in FY2014-15. Overall NPAs of banks in Gujarat also jumped to 5.92% from 3.45%.
 

As per the SLBC data, banks in the state extended advances worth Rs 4.31 lakh crore in FY16, of which over Rs 25,000 crore turned to NPAs by end of March 2016. In 2014-15, advances were Rs 3.87 lakh crore while NPAs stood at Rs 13,353 crore.
 
Out of total advances of Rs 83,084 crore given to the MSMEs of Gujarat, Rs 5,758 crore turned into NPA in the financial year 2015-16. The lending to the MSMEs has increased by Rs 19,000 crore or 29.64% in the financial year. In 2014-15, NPA of MSMEs was Rs 2,240 crore as against advances of Rs 64,084 crore.

 
After Reserve Bank of India’s order to review asset quality, many accounts have been declared under stress which increased the NPA of banks in Gujarat.
 
The SLBC report stated that NPAs of nationalised banks in Gujarat are at 9.99% for FY2015-16 while it is at just 0.85% for private sector banks. Among all nationalised banks, Allahabad Bank has registered highest NPA of 22.96%, followed by Indian Overseas Bank with 21.73% and Andhra Bank with 18.17%. Bharatiya Mahila Bank has lowest NPA of 0.59% followed by Punjab and Sind Bank with 1.24%.
 
Gross NPA of State Bank of India group has reached 4.69% in Gujarat with gross NPA amount of Rs 4,261 crore.