Banks still bogged down by NPAs

Sudden spurt in bad loans in Q1 of FY18 brought back fears the worse is not over yet for the banks

Banks’ bad loans saw a spurt in 2015-16 following the Reserve Bank of India (RBI)-mandated asset quality review. In FY17, the slippages stabilised, raising hopes that the asset-quality deterioration would reach its peak. But, a sudden spurt in bad loans in Q1 of FY18 has brought back fears that the worse is not over yet for the banks.

What caused the spurt in NPAs in Q1

• End of forbearance for small loans after demonetisation 

• Repayment held back for farm loans in hope of waivers 

• State Bank of India’s recovery efforts hit by bank merger transition 

• Corporate slippages from watch lists and outside of those lists