Slippages Nearly Halved For Public Sector Banks In FY19

Public sector banks reported a 45 percent year-on-year reduction in their annual slippages in financial year 2018-19, according to a reply in Parliament.

Corporate loans classified under the special mention account 1 and 2 categories—that could have turned bad—saw a 63 percent reduction, said the Finance Ministry’s written response to questions raised in the Lok Sabha. The two categories include accounts that have cleared dues within 31-90 days of becoming overdue.

A BloombergQuint assessment earlier this month had found that public sector banks wrote off nearly 25 percent of their gross non-performing assets in FY19, or Rs 1.94 lakh crore, as a way to improve asset quality in their balance sheets.

In its reply, the Finance Ministry said the improvement in asset quality was achieved through 4Rs: recognition, recapitalisation, resolution and reform. The process of recognition of stressed assets is nearly over and the recovery is underway, it said.

In the last financial year alone, public sector banks recovered bad loans worth Rs 1.23 lakh crore. Over the last four fiscals, these banks have been able to recover Rs 3.59 lakh crore, the ministry said.

In the last five financial years, the government has infused capital worth Rs 2.5 lakh crore, while public sector banks themselves have raised around Rs 66,000 crore to take care of the recognition and write-offs of the stressed accounts.

“With substantial cleaning up accompanied by capitalisation of banks, the overall credit growth of PSBs has picked up substantially, from 0.78 percent in FY17 to 7.51 percent in FY19,” the finance ministry said.

As on March 31, the total gross non-performing assets of public sector banks had come down to Rs 8.06 lakh crore, from Rs 8.96 lakh crore a year ago.

The figures for public sector banks include those by IDBI Bank, which was recategorised as a private sector bank by the Reserve Bank of India in January.