India’s Bad Loans at 9.1%, Highest Among 10 Emerging Economies in World : RBI

Indian lenders have the highest percentage of bad loans as compared to 10 emerging economies that include Brazil, China, Indonesia, Philippines and Turkey, the Reserve Bank of India said in its report on Trend and Progress of Banking 2018-19.

The report also reveals even though bad loans improved to 9.1% in March 2019 from an earlier 11.2% in the same period last year, most of those came down due to write-offs by banks.

The lenders wrote off Rs 2.36 lakh crore of non-performing assets (NPA) or bad loans from their books, according to the Ministry of Finance and the central bank.

Gross NPA of public sector banks improved to 11.6% in 2018-19 from 14.6% in the previous fiscal, while that for private sector banks rose to 5.3% from 4.7%, primarily due to the accumulation of bad loans at IDBI Bank.

The RBI report also raised concerns about the quicker resolution of stressed assets, corporate governance, and frauds. Without naming any bank, RBI said fault lines were becoming evident in the corporate governance of some of the private sector banks.

The report also revealed that the number of frauds reported by banks and financial institutions during 2018-19 rose to the tune of Rs 71,543 crore from an earlier Rs 41,167 crore in the previous year. The method or type of large value frauds, which account for 86.4 percent of all reported during the year, involved, diversion of funds by borrowers, primarily through associated or shell companies.