Bad loans of the 38 listed banks collectively crossed Rs 10.17 lakh crore in Q4 FY18

Last week, a CARE Ratings report had pointed out that the non-performing assets of 26 listed banks stood at Rs 7.31 lakh crore as per their declared Q4 FY18 results. Since then, all the 12 remaining listed banks have also announced their results, including Bank of Baroda, Andhra Bank, Corporation Bank and private lenders like City Union, Dhanlaxmi and Karur Vysya. And the sorry figure has just snowballed further. All the 38 listed banks accounted for gross NPAs totalling over Rs 10.17 lakh crore in the quarter ended March. In comparison, the gross NPAs of all the banks in the country had amounted to Rs 8.40 lakh crore as on December 31, 2017.

There's more bad news. In response to an RTI filed by The Times of India, the RBI disclosed that the scheduled commercial banks (SCBs) cumulatively wrote off as much as Rs 2.25 lakh crore through the five-year period that ended in March 2016. These SCBs - covering private lenders, PSBs, foreign banks, regional rural banks and some co-operative banks - account for over 95 per cent of the total formal credit disbursed in the country.

Worryingly, the daily added that in the financial year 2014-15 banks could only recover 11.85 per cent - or Rs 6,968 crore - of the written-off accounts in that year. The recovery figure improved slightly to 13.8 per cent the following fiscal, or Rs 9,717 crore. Furthermore, the amount being written-off is increasing every year by an average of around Rs 12,000 crore. This is significant because banks deduct the written off amount from their gross NPA total. Imagine how much worse the bad loan problem would appear otherwise.

Of course, it is worth remembering that the apex bank's revised framework for resolving stressed assets, announced in February, has played a major role in causing a jump in the NPAs. Hence, the total provisions made during the year by the banks cumulatively have also gone through the roof and their profitability has taken a beating.

As can be seen from the table below, only two PSBs reported a net profit in the year ended March 31 - Vijaya Bank and Indian Bank. The remaining 19 state-owned banks collectively posted a net loss of over Rs 87,583 crore. In other words, these banks ran up a loss of almost Rs 10 crore per hour during the last fiscal. No wonder they are only able to offer their employees a wage hike of 2 per cent.

In the bargain, the rest of us have to deal with a crippling two-day bank strike by the protesting employees. Nearly 10 lakh employees - from not just the PSBs but also 13 old-generation private sector banks, six foreign banks and 56 regional rural banks across the country - boycotted work yesterday, according to the All India Bank Employees Association. "The strike call evoked good response. About 85,000 bank branches...spread across the country were closed," the union's general secretary, C.H. Venkatachalam told IANS. More of the same is expected to play out today, unless the Indian Banks Association agrees to their demand for an expeditious and adequate wage revision settlement for all employees, including general managers.

With agency inputs