Money & Banking

Asset quality concerns persist, says RBI report

Our Bureau Mumbai | Updated on June 28, 2012

Asset quality concerns persist for banks as growth in the non-performing loans in FY12 accelerated and continued to outpace credit growth, according to a report released by the Reserve Bank of India.

The RBI’s financial stability report stated that the NPAs grew at 43.9 per cent as on March end, 2012 outpacing the credit growth of 16.3 per cent which could put further pressure on the loan quality in the near term.

Net NPL ratio stood at 1.3 per cent as on March 31, 2012, as compared with 0.9 per cent as on March 31, 2011, the report said. It also pointed out that the ratio of NPLs to capital fell short when benchmarked against economies such as China and Brazil which have a negative ratio.

The slippage ratio increased to 2.1 per cent from 1.6 per cent last year. Slippage ratio is defined as the ratio of fresh accretion to NPLs during the year to standard advances at the beginning of the year.

The ratio of slippages plus restructured standard advances to recoveries (excluding up-gradations) also showed a rising trend signalling the need for proactive management of NPAs.

>beena.parmar@thehindu.co.in

Published on June 28, 2012

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