Non-performing assets (NPAs) in the banking system were highest in last five years

BS Reporter / Mumbai Oct 01, 2012, 21:48 IST

Non-performing assets (NPAs) in the banking system were highest in last five years, according to the Reserve Bank of India (RBI) data.

Net NPA levels in the year 2011-12 were at 1.28% in the banking system. Net NPA ratio of the nationalised banks (excluding SBI and associates) crossed 1% mark in the net NPA ratio for the first time in last five years at 1.43% in 2011-12. The ratio was lowest at 0.68% in 2008-09. Including SBI and its associates it stood at 1.53% for all public sector banks.

Though the net loan loss ratio is at highest in the past five years for the banking system, for private sector banks, it has declining continuously for the past three years. In 2011-12, the private banks reported net NPA ratio of 0.46% compared to 0.56% reported last year.

Country's largest lender State Bank of India reported net NPA ratio of 1.82% in 2011-12 compared to 1.63% reported a year back. SBI advances are about 17% of the total banking system.

“The overall economy is slowing down and the cash flows of corporates have been affected which has had cascading effect on NPA levels” said one senior public sector bank executive.

RBI today published a profile of Indian banks for 2011-12. RBI in its report said that profitability in terms of return on assets (RoA) declined in 2011-12 compared to previous financial years while cost of funds (CoF) increased for the banks.

Also profit per employee remained static for the nationalized (excluding SBI group) banks in 2011-12 and increased for the other bank groups. Capital adequacy ratio (CAR) declined in 2011-12 for all banks excluding SBI group.

SBI group reported CAR of 13.70% in 2011-12 an increase of 145 basis points over last year. This increase helped overall banking system to post an increased CAR in 2011-12 though the CAR for other groups of banks declined compared to last year.