Foreign Banks operating in India have outpaced domestic banks, both private and PSUs, in reducing the level of non-performing assets, a study has revealed.
The study conducted by industry body Assocham said foreign banks in India have reduced their NPAs by 32 per cent in 2004-05 followed by private sector domestic banks which also registered a decline of 30 per cent in their NPAs.
Public sector banks, however, managed to bring down bad debts by just 8 per cent during the period.
"It goes to the credit of the banks that they have improved their asset quality despite aggressive growth in their advances, particularly in the retail sector," Assocham president Anil K Agarwal said.
In addition to gross NPAs, foreign banks registered a 38 per cent reduction in their net NPAs. Domestic private sector banks reduced their net NPAs by 18 per cent in 2004-05 against a sharp decline of 52 per cent in 2003-04, the study said.
"Among the sheduled commercial banks, foreign banks topped the list in providing the cushion of provisions against NPAs. These banks cushion against NPAs was the highest at end March 2005, constituting 63 per cent of gross NPAs," the study said.
The Asset Reconstruction Corporation of India provided a major boost in the banks' effort to set off NPAs.
ARCIL bought NPAs worth Rs 15,343 crore (Rs 153.43 billion) during 2004-05. FIs sold NPAs worth Rs 837 crore (Rs 8.37 billion), public sector banks Rs 5,504 crore (Rs 55.04 billion), old private sector banks Rs 237 crore (Rs 2.37 billion) and new private sector banks Rs 8,765 crore (Rs 87.65 billion) to ARCIL during the period.
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