How rising NPAs have crippled the Indian banking sector

According to a CARE Ratings report, the situation of NPAs in Indian banking sector is alarming. In March 2018, the NPAs of 26 banks were Rs 7.31 lakh crore and have increased by Rs 2.5 lakh crore this year over March 2017.

The banks' NPAs are steeply rising. In December 2013 the banks reported NPAs were Rs 2,52,275 crore which rose to Rs 8,40,250 crore in September 2017.

There has been a steep upward trend from September 15 onwards with an exception of the March quarter in 2017 which saw a marginal dip in the Gross NPAs.

This graph specifically focuses on the public sector banks (PSB) where the gross NPA is touching the value of Rs 7,33,974 crore. The rise can be attributed to the RBI's February guideline which mandated the banks to report the NPAs which had surpassed the 90-day period. The major PSBs include SBI, PNB, IDBI, Bank of India among others.

The private banks are no exception as the NPA percentage, compared with the total advances given by the private banks, is on a steep climb. The private banks performed even worse than the public sector banks during the March quarter in 2017 when NPAs rose by 6.1%.

The NPAs reported by the SBI in its March quarter rose to Rs 2.23 lakh crore from Rs 1.99 lakh crore during the December quarter, which is a rise of 12.06%. Oriental Bank had the least amount of NPA among public banks.

ICICI Bank had the highest amount of NPAs in the private sector bank category of Rs 44,489 crores. AXIS Bank, Federal Bank and South Indian Bank had NPAs less than Rs 2,000 crore.

When we compare the NPA with respect to the total advances made by a bank, the IDBI Bank was the worst lender as it had the heighest rate of default. About 25% of its advances was converted into NPAs. Most of the PSUs lie in the same crater when it comes to bad loans.

In the private banks category, J&K Bank was the worst performer with 10.9% of its advances turning into NPAs.