Banks in Gujarat are seeing a “drastic jump” in the quantum of bad loans. In March this year, the Non-Performing Assets (NPAs) for the banks in the state have crossed the Rs 25,000 crore mark, with MSMEs forming the largest chunk of this NPA-pie.

The latest report of the State Level Bankers’ Committee (SLBC) released on June 30 states the total advances of all banks in Gujarat stood at Rs 4.31 lakh crore at the end of March 2016. Of this, the gross NPAs stood at Rs 25,546 crore, which is almost double the quantum of bad loans that existed the previous year.

A year ago, i.e in March 2015, the NPAs in the state stood at Rs 13,353 crore which was 3.45 percent of the total advances. The NPAs now constitute 5.92 percent of the total advances made by the banks in the state.

“There is definitely a drastic jump in the NPAs which have hit the bottom lines of banks like Bank of Baroda, Punjab National Bank, Dena Bank and others. The main reason for this is the asset quality review ordered by Reserve Bank of India (RBI) due to which a lot of accounts under stress were declared as NPAs,” said Vikramaditya Singh Khichi, the convenor of SLBC.

The percentage of gross NPAs among nationalised banks of the state stand at 9.99 percent while that for private banks is just 0.85 percent. Among the nationalised banks, the percentage of gross NPAs is the highest in Allahabad Bank (22.96 percent), Indian Overseas Bank (21.73 percent) and Andhra Bank (18.17 percent), states the SLBC report.

Meanwhile, the NPAs from MSMEs that stood at 3.5 percent in March 2015, rose to 6.93 percent in March 2016. The advances to MSMEs — that are classified under priority lending — in Gujarat stood at little over Rs 83,000 crore during March 2016, of which Rs 1467 crore were extended to 5,173 units for technology upgradation. This is Rs 19,000 crore more than the advances given to this sector in 2015.

“Though the credit flow in the MSME sector has been very good this time, the subdued economy has not only taken a toll on the ancillary units of the bigger companies, but has also hit the MSMEs,” Khichi added. This funding to MSMEs have been one of the hotly debated subject in industrial circles of Gujarat which saw over 49,300 MSME units reporting “sick” in 2015.

Poor monsoon since the last two years is showing its effect on the growth of deposits in banks of Gujarat. Banks in the state reported a growth of 9.78 percent (Rs 5.38 lakh crore) which is less than the 14.33 percent clocked in 2014-15 or the 16.02 percent clocked in 2013-14. “We have not been witnessing good monsoon during the last two years. The continued drought-like situation in the state has taken a hit on the deposits,” said Khichi.

The highest percentage of growth was registered by private sector banks (17.83 percent), followed by Regional Rural Banks (16 percent), Gujarat State Cooperative Bank (8.83 percent), State Bank of India Group (8.73 percent) and nationalised banks (7.62 percent). The NRI deposits stood at Rs 64,517 crore forming 11.99 percent of the total deposits, as against Rs 54,574 crore (11.13 percent) as of 2014-15.

Source: The Indian Express

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