The asset quality in banks has deteriorated at a "frightening pace" during 2013-14 fiscal with public sector banks bearing the maximum brunt of bad loans, a RBI panel report has said.
At the quarter ended December 2013, banks collectively held loan provisions of Rs 98,593 crore, an increase of 13 per cent over the provisions held a year earlier. "During 2013-14, loan asset quality in banks has deteriorated at a frightening pace," said the report of a Reserve Bank appointed committee.
Of this amount, Rs 32,295 crore of provisions were held by the SBI group and Rs 45,357 crore were held by the other public sector banks.
"Thus, 79 per cent of total bank provisions were held by public sector banks, demonstrating the high level of stress visible in these banks. This has taken its toll on quarterly profitability for public sector banks," it added. The profitability of SBI Group alone has fallen 30 per cent over a period of one year, while for other PSU banks it has declined 39 per cent.
"For these bank segments provisioning is nevertheless inadequate, as net NPAs as a proportion of net advances have risen 50 per cent in a year for the SBI group and 41 per cent for other public sector banks," the report added. Gross NPAs as a proportion of gross advances have increased significantly over the last year for the SBI group and the other public sector banks.
Capital, too, has eroded, with net NPAs as a proportion of net worth rising 40 per cent in a year for the SBI group and 25 per cent for other public sector banks, the report added.
It further said that as on December 2013, net NPAs as a proportion of net advances equalled 0.61 per cent for the new private sector banks and 1.11 per cent for the old private sector banks.
The old private sector banks include Federal Bank, Dhanlaxmi Bank, Lakshmi Vilas Bank, Karnataka Bank, etc. The new generation private sector bank include ICICI Bank, HDFC Bank, Axis Bank and Yes Bank.