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2014-03-06

Bad loans of PSU banks increased due to stress in SME space: FM

Public sector banks could report higher non-performing assets in the current financial year ending March, Finance Minister P. Chidambaram said after a performance review meeting with public sector banks and financial institutions.

Public sector banks could report higher non-performing assets in the current financial year ending March, Finance Minister P. Chidambaram said after a performance review meeting with public sector banks and financial institutions.

 

“(PSU banks’) NPAs at the end of March 2013 are 3.84(%). So we have to wait and watch and see what it will be for March 2014. It is likely to be a little higher. But we have to wait and see”, the minister said adding that NPAs and asset quality of loans are the biggest challenges for banks.

 

The minister refused to detail the NPA level for the first three quarters of the fiscal, saying the numbers could be misleading.

 

“NPA levels should be looked only at the end of the year. At the beginning of the year, they can give you a very misleading picture, so I am not going to give you anything as on Sep 2013 or Dec 2013, as that can give you a very misleading picture,” Chidambaram said.

 

He said bad loans had increased due to the stress in large corporate accounts, the small-scale industry, and small and medium enterprises.

 

“They (PSU banks) will focus on asset quality, they will focus on credit appraisal, they will also focus on recovery,” the minister said.

 

During the first three quarters of the current financial year, PSU banks had recovered Rs 189.3 billion worth bad loans, and have further upgraded accounts worth Rs 219.8 billion, he said.

 

The government is monitoring the top 30 NPA accounts in the banking system, the minister said.

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