In an indication of companies defaulting on financial obligations, domestic banks have seen an increase of up to 85 % in bad loans since the current fiscal year. The sharp rise comes at a time when the corporate debt restructuring (CDR) cases has also grown to record highs.
In the first six months of FY 2012-13, the banks referred a record 74 CDR cases, involving a total debt of Rs. 40,000 crore, for restructuring.
Simultaneously, 35 banks report an increase in their gross NPAs (Non-Performing Assets) vis a vis the last FY 2011-12. Gross NPAs have risen by as much as 60 % for PNB, Allahabad Bank and Lakshmi Vilas Bank, while the surge has been even higher for South Indian Bank (86 %) in the same period.
Collectively, these 35 banks have seen their gross NPAs grow by over 28 % or over Rs. 32,000 crore in the first half, taking their total bad loans to Rs. 1.47 lakh crore by September-end.The analysis does not include the foreign banks and unlisted domestic banks, as the data were unavailable.
As per RBI, the gross NPA for all banks in the country was Rs. 1.42 lakh crore at March 31, 2012.The RBI had recently asked the banks to strengthen their due diligence and credit appraisal system along with the monitoring mechanism to contain the bad assets.