BUSINESS

How bad loans are affecting the banking sector

May 18, 2015 12:02 IST

Stress on bank assets is again in the news. As Table 1 shows, non-performing assets, or NPAs, of banks have increased sharply - for public sector banks, in particular.

click here to see the graph

Table 2 shows the public sector banks with the most NPAs (and those with the least). The size of the problem dwarfs even the worst-off private banks, shown in Table 3.

The market has punished public sector banks - although their stocks have risen in recent years, those of private banks have risen further, as shown in Table 4.

The cost of keeping bad debt on the books has squeezed public sector banks' net profits, shown in Table 5.

And it has caused them to put the brakes on lending, as shown in the low deposit growth in Table 6.

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