NPAs may escalate in Dec quarter: IOB

PSU lender Indian Overseas Bank (IOB) today said its bad loans are likely to increase in the December quarter but would stabilise in the January-March quarter.

"Our NPAs have been rising in the period till September. This is likely to continue in the third quarter also. After that, I expect it will stabilise," Indian Overseas Bank Chairman and Managing Director S A Bhat told reporters here.

Asked whether the non-performing assets (NPAs) were coming from specific sectors, Bhat said the bank had seen defaults in all portfolios.

"It is coming from all sectors," he said on the sidelines of the Bancon seminar here.

Early in the day, State Bank of India Chairman O P Bhatt had also said that bank bad loans may rise in the next two quarters, particularly from small and medium enterprises.

Meawhile, Bhat said the Reserve Bank of India was expected to hike its cash reserve ratio (CRR), the amount banks must keep with the apex lender, by at least 0.25-0.5 per cent in the January 29 monetary policy, however, any hike in key lending and borrowing rates were unlikely.

He added that the bank's lending rates are, however, expected to remain stable till March regardless of the monetary policy actions. "What is the use of hiking our rates when there is very less credit demand," Bhat said.

The bank expects a credit growth of 15 per cent in FY10, against the earlier target of 18 per cent owing to slow credit off take, he said.