Contrary to the popular belief that smaller companies contribute more to bad loans, large and medium industries accounted for over 55 per cent of the stressed loans in the banking sector as on September-end 2015, up from 42 per cent at the end of March 2014, Reserve Bank of India Deputy Governor SS Mundra said in a presentation on Thursday.
Since 2012-13, proportion of stressed assets for large and medium corporates have been on a rise and they jumped from 36 per cent in March 2013 to 50 per cent by March-end 2015.
“Contrary to popular perception, stress relatively much less in priority sector. Restructuring mostly in larger accounts,” Mundra said.
Small and micro industries accounted for 29 per cent of the stressed loans by September-end 2015, while agriculture sector account for the lowest 7.9 per cent stressed loans.
While the proportion of stressed assets has been roughly steady for the agriculture sector over the past three-and-a-half years, it has been steadily rising for industries. Stressed assets comprise of non-performing assets (NPAs), restructured loans as well as written-off accounts.
The promoters must recognise their failure and cooperate with the banks in repaying loans, Mundra said at a conference organised by CII.
He said the overall stress surged to 14.1 per cent as of September 2015, up from the 13.6 per cent in March. For state-run banks, the overall stress stands at 17 per cent, while for private ones it is 6.7 per cent and 5.8 per cent for foreign lenders.
Mundra said the asset quality was more of a governance issue rather than an ownership issue, and the banks should work on improving credit origination and administration standards.
In the last three years, public sector banks have written off Rs 1,14,000 crore as reported by The Indian Express on February 8. After writing off Rs 53,100 crore in the 2014-15, banks are expected to write off another Rs 52,227 crore this year, as per India Ratings data. Loan write-offs in the first half of 2015-16 were Rs 25,000 crore. With this, banks would have written off Rs 2,77,400 crore in the last ten years with more than half the write-offs happening in the last three years. Gross non-performing assets, or bad loans, are expected to jump 31.48 per cent in the fiscal ending March 2016 to Rs 426,400 crore from Rs 3,24,300 crore.