Is the worst over on dud loans in state-run banks? Here's what data says

State-run banks' standard restructured advances fell to Rs 0.34 trillion by Q3FY19

Is the worst over on dud loans in state-run banks? As a result of the asset quality review, standard restructured advances (SRAs) in these banks fell to Rs 0.34 trillion (or 0.5 per cent of gross advances) by Q3 FY19 from a peak of Rs 3.93 trillion (or seven per cent of gross advances) in FY15. 

Over the same period, gross non-performing assets (NPAs) moved to 13.7 per cent of gross advances from five per cent. State-run banks had set aside Rs 8.12 trillion in provisions by Q3 FY19 since recognition began in FY15. 

As a result, the Provision Coverage Ratio (inclusive of provision held against technically written-off accounts) saw a substantial improvement to 68.9 per cent during this period from 46 per cent.

With stress recognition largely completed, significant resolution under the Insolvency and Bankruptcy Code and reduced slippages, global NPAs also came down, albeit marginally. ­

Reduced slippages in future are indicated by reduction in the same in H1FY19 by 25 per cent over that in H1FY18, a 47 per cent reduction in special mention accounts in December 2018 as compared to June 2017; and near doubling of the ratio of credit rating upgrades to downgrades on 12-month rolling basis to 1.7 in H1FY19 from 0.9 in H1 FY17.