Stressed bank loans at Rs 9.5 trn in Dec, PSB loans account for Rs 8 trn

Private sector lenders' stressed loan pile was about Rs 1.1 trillion, or 4.6% their total loans

Soured loans at India's banks rose in the three months to December to Rs 9.5 trillion ($145.9 billion), after declining from record high levels in the previous quarter, data from the central bank showed on Monday.

Stressed loans — which include non-performing as well as restructured or rolled-over loans — rose 0.4 per cent from Rs 9.46 trillion as at end-September, unpublished data reviewed by Reuters showed.

The ratio of the troubled loans, however, eased to 11.9 per cent at December end from 12.2 per cent three months earlier, according to the data compiled by Reserve Bank of India, based on filings by individual lenders.

Banks are staring at an increase in their soured loans pile — which hit a record high of 9.51 trillion rupees at the middle of last year — after a central bank rule change announced in February abolished all existing restructuring schemes.

While resolutions under the fledgling Indian bankruptcy court process should help lower some of the soured loans pile, bankers and analysts say the worst of the bad loan woes for the banks may be yet to come.

Banks' stressed-loan pile has more than doubled in the five years to last December as a prolonged economic slowdown pressured companies' ability to service their loans, while in some cases profligate lending practices and fraudulent transactions have also aggravated the problem.

A more than $2 billion fraud in the second-biggest Indian state-run lender Punjab National Bank that was first disclosed in early February has stunned the country's financial sector and has triggered a crackdown by regulators to unearth more such fraudulent deals.

According to the latest RBI data, obtained through a right-to-information request, 21 state-run banks which account for more than two-thirds of India's banking assets had as of December 31 stressed loans of Rs 8.26 trillion, or 15.8 per cent of their total loans.

Private sector lenders' stressed loan pile was about Rs 1.1 trillion, or 4.6 per cent their total loans. Foreign banks' Indian operations had Rs 144.26 billion, or 4.1 per cent of total loans, in stressed debt.