New Delhi. India’s increasing amount of bad loans has surpassed the New Zealand’s $170- billion economy. This bad – loan problem is much beyond the acknowledgement of lenders that is adversely affecting the profitability of the banks with rising loans.
According to the international agency Reuters, results of the private sectors late last month reported an increase in the Non-performing assets were starling, while underscoring continuous warnings by RBI Governor Raghuram Rajan on the need to clean up the banks’ balance sheet.
Danger is clearly visible, says report. The measures undertaken to cover rising bad loans may dwindle the profitability of the banks and also reduce the pace of credit growth in the country, stoking a vicious cycle of low economic growth and choking off business investment and production.
Indian banks credit growth in the last financial year was measured at10.7 percent, lowest of two decades. Profits of several bank has taken a hit due to the RBI order to clean up the balance sheet.
Glandulous information released by the ICICI Bank and Axis Bank lighted the intensity of the problem.
Bank presented loan of Rs 22,600 on a ‘watch list’ in which 60 percent of the loan could come under default. This means that its bed debt could triple from the Rs 6,088 crore reported at end-March
ICICI Bank disclosed some Rs52,500 crore loan on ‘watch list’ given to struggling sectors .
These State-owned banks get posses more than two-thirds of the sector’s assets and approx 85 percent of bad debts – a major headache for policymakers.