Do you know what is the amount of operating losses incurred by the Public Sectors Banks in India in the Quarter ending 31st March 2019? Yes, it is alarming and has touched the figure of over Rs. 50,000 crores. Thanks to the outcome of large insolvency cases, risks coming afresh due to revelation of accounts under Agriculture, Realty and NBFCs going bad.
- Also, there is a likelihood of reversal if some of the companies go for a low value on account of insolvency process, though the actual gross non-performing loans as at the end of March 2019 might be lower at 7.7 lakh crore.
- Economy is growing slowly with 5.8% year on year GDP growth in the March quarter, thus increasing the concern of the Credit Exposures turning deadly in the areas of Agriculture, Real estate and NBFCs.
- Government has inducted Rs. 2 lakh crores of capital in these banks during the last two years, which includes Rs. 5,2000 crores in this quarter.
- A large part of these capitals infused have been used to increase provisioning and have been squared up with the increased credit cost, which in turn made these banks show a loss in their Q4 quarter.
- With their hands tied up with the value of assets continuously decreasing, these banks are unable to disburse loans like the private sector banks. The above picture depicts a true picture of these facts.
- The figures released by RBI reveals that the bank credit to individuals and companies reduced by 11.9% on an year-on-year in April this year. Further,
- Vehicle loans increased by 5% y-o-y
- Personal loans increased by 21.4% y-o-y
- Micro and Small units increased at 1% y-o-y
- Medium enterprises were up by 3.5% y-o-y
- While banks have made provisions for Stressed Assets Non-Banking Financial Companies (NBFCs) were facing a downgrade which was a matter of concern.
- Also, there is no much improvement in quality of Assets in any of the banks.
PRIVATE SECTOR BANKS:
- ICICI Bank was the most successful bank in improving its asset quality with gross NPAs dropping over 14% y-o-y to Rs. 46,292 crores, and their exposure to new stressed assets was low.
- Yes Bank’s Gross NPA soared in the March quarter of FY 2019 which shot up over 200% y-o-y to Rs. 7,883 crores.
- IndusInd Bank saw a 131% y-o-y in gross NPAs to Rs. 3,947 crores.