Mounting bad debts worry public sector banks

Public sector banks operating in Odisha are grappling with mounting non-performing assets that have climbed to Rs 4,067.24 crore by the end of June this year, representing 8.27 per cent of their total advances.

State Bank of India (SBI), the biggest state run lender, leads the pack with gross NPAs worth Rs 2,226.81 crore which marks 11.65 per cent of its overall advances. UCO Bank’s gross NPAs by June-end had reached Rs 382.36 crore, representing 9.22 per cent of its total lending.

Other public sector banks with sizeable NPAs include Bank of India (Rs 229.67 crore), Andhra Bank (Rs 109.50 crore), IDBI Bank (Rs 116.93 crore), Indian Overseas Bank (Rs 147.96 crore) and Union Bank (Rs 133.71 crore)

Spike in NPAs of public sector banks has triggered nationwide concerns, raising questions on their asset quality. But NPAs of public sector lenders in Odisha at a glaring 8.27 per cent of total advances was higher than the national average of 3.3 per cent (as on March 31, 2012). “The sharp growth in NPAs of the PSU banks in Odisha, especially over the past one year is a disturbing trend. Bad loan accounts are mostly those of the micro, small and medium enterprises (MSMEs) and also exporters. To a lesser extent, government sponsored Pradhan Mantri Rozgar Yojana (PMRY) has to take the blame as recoveries have been discouraging under the scheme,” said an official of a leading public sector bank.

At the recently held meeting of the State Level Bankers’ Committee (SLBC)-Odisha, UCO Bank executive director and chairman of the committee S Chandrasekharan had blamed poor collections from government schemes like PMRY and Swarnajayanti Gram Swarozgar Yojana (SGSY) for the poor recovery rate of banks. While recovery of public sector banks had sharply fallen from 42.58 per cent from March-end to June-end this year, PMRY recovery had shown a marginal improvement from 15.26 per cent to 16.90 per cent in this period. The percentage of recovery of recovery of all commercial banks was lacklustre at 42.23 per cent by the end of June this year. In the MSME sector, the PSU banks had managed to collect only Rs 647.67 crore, meaning 45.84 per cent of the total demand for recovery at Rs 1,412.59 crore. SBI which is at the top of the heap of NPAs, had barely collected Rs 213.83 crore, an achievement of only 27.9 per cent of the total demand for recovery at Rs 763.68 crore.