Bad loan formation high in small category borrowers: RBI

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MUMBAI: With aggregate loan portfolios and gross bad loans declining in the large borrower category, the Reserve Bank of India on Friday indicated that both credit and NPA accretions were occurring in the small borrower category in the last two years.

Growth in large borrower stressed advances declined by 8.5% at the end of March 2020, bad loans in this category fell 7%. Large borrowers accounted for 51.3% of loans and 78.3% of gross bad loans for banks in March 2020.

While the top 100 borrowers accounted for 17.5% of gross advances but only 12.6% of gross bad loans.

“Both (loans & GNPA) these shares have declined since March 2018 implying that on an incremental basis, credit and NPA accretions are occurring in the small borrower category in the recent period,” the RBI noted in its financial stability report.

The regulator also noted that borrowers who were making delayed payments or SMA category loans and restructured advances also declined in the March quarter. Loans due zero to 30 days crashed 54.4%, while those due 30 to 60 days fell by 4.6%. There was also a steep fall in loans due 60 to 90 days which saw a drop of 20.2% in the March quarter. Restructured standard advances in the large borrower category also dropped 31.7%.

While system wide SMA-2 or loans due 60 to 90 days was at 0.89%, this was at 1.2% for state-run and 0.3% for private lenders, RBI data showed.





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