SBI alone had recoveries to the tune of Rs 4,038 crores and has written off loans worth Rs 5,617 crores.
India’s biggest PSU banks — State bank of India (SBI) and Punjab national bank (PNB) — saw a considerable fall in non-performing assets in the fiscal’s second quarter. SBI, which accounts for the highest share of PSU Banks’ GNPAs at 20 per cent, reported the highest asset good quality improvement in the second quarter. Its GNPA ratio fell to 5.3 per cent in September 2020, compared to 7.2 per cent in the identical month final year. Another significant PSU bank, PNB that accounts for 16 per cent share in general PSU banks’ GNPAs, saw a fall in NPAs at 13.4 per cent in September 2020, compared to 16.8 per cent in the final year.
The improvement in asset good quality has majorly been due to recoveries and greater create-offs by the many banks. SBI alone had recoveries to the tune of Rs 4,038 crores and has written off loans worth Rs 5,617 crores, according to Care Ratings. Among other PSU banks, NPAs of Bank of India fell from 16.31 per cent to 13.79 per cent on year in Q2 Bank of Maharashtra (16.86 per cent to 8.81 per cent) Indian Overseas Bank (20 per cent to 13.04 per cent) and NPAs fof UCO Bank fell from 21.87 per cent to 11.62 per cent on-year in Q2.
The net NPAs of all banks also shrank considerably to Rs 2.1 lakh crores in Q2 FY21 from Rs 4.5 lakh crores in Q2 FY19, reflecting an boost in provision coverage ratio (PCR). The aggregate provision coverage ratio of all banks rose to 80 per cent at the finish of Q2, from 68.9 per cent in the preceding year. The GNPA ratio of scheduled industrial banks additional enhanced to 7.7 per cent in the quarter ended September 2020, against 9.3 per cent in the year-ago period, and 8.2 per cent in the present fiscal’s initial quarter, which was largely driven by PSU banks.
The aggregate interest earnings recorded a marginal boost of .8 per cent in the course of Q2 due to subdued credit offtake, coupled with falling interest prices. Additionally, the falling deposit interest price in the quarter also led to a decline in interest expense of banks by 8 per cent, compared with 9.4 per cent development in the year-ago period.
It is to be noted that the Supreme Court has ordered all banks to not classify Covid-19 associated defaults as NPAs till additional notice, or else the NPAs would have been greater in the second quarter. As per disclosures by banks studied by the rating agency, the Gross NPAs would have been about .5 – .6 per cent greater if these accounts been classified as NPAs. Meanwhile, IDBI Bank and Lakshmi Vilas Bank had the highest NPA ratios of about 25 per cent in the second quarter.