CHENNAI: Amid concerns over rising bad loans, latest RBI data shows that recovery of non-performing loans (NPAs) by scheduled commercial banks (SCBs) rose an eye-popping 641 per cent in the past three years.
The heightened activity in loan recoveries indicates banks’ aggressiveness in cleansing their balance sheets to minimize the damage resulting out of NPAs. In fact, banks have been going after recoveries since FY14, when the total number of cases referred for recovery jumped to 1.8 lakh involving Rs 1,73,800 crore.
If SCBs recovered NPAs worth Rs 23,300 crore in 2012-13, the figure rose to Rs 1,72,600 crore in 2014-15 — an increase of 641 per cent. Interestingly, the number of cases referred for loan recovery too shot up a whopping 910 per cent from about 1 lakh cases in FY13 to over 10 lakh cases in FY15. Accordingly, the total amount involved rose from Rs 1,05,700 crore to Rs 9,38,100 crore during the same period.
Though the number of cases banks pursued rose sharply, the rate of growth in percentage of loan referrals translating into recoveries was flat. For instance, both in FY14 and FY15, the percentage of loans recovered out of the loans involved remained at 18.4 per cent and down from 22 per cent in FY13.
The latest data by RBI titled “Statistical Tables Relating to Banks in India: 2014-15" released last week, comes a day after the central bank's Financial Stability Report, which underscored the corporates weakening interest coverage ratio, and thereby their ability to service debt and interest payments.
Meanwhile, the Corporate Debt Restructuring (CDR) cell received no new cases for loan recast during the second quarter of 2015 over the preceding quarter. As on September, 2015, the CDR cell had 655 cases aggregating to Rs 4.74 lakh crore debt — a figure carried forward from June, 2015. New cases grew a marginal 3 per cent from 638 cases as on September, 2014 to 655 in September, 2015. In value terms, the aggregate debt component grew 6.2 per cent in September, 2015 at Rs 4,74,002 crore from Rs 4,46,156 crore a year ago.
In fact, the number of cases being referred to the CDR cell hit a 3-year low in 2014-15. While in FY14, public and private banks, received a record 101 cases with an aggregate debt of Rs 1.3 lakh crore, it fell 66.65 per cent to Rs 44,014 crore in FY15. During FY113 and FY12, it stood at Rs 91,497 crore and Rs 67,889 crore respectively.
Major 5 Sectors Take Lion’s Share of 61 per cent
The top five sectors comprising infrastructure, iron & steel, power, construction and textiles comprised a lion's share of 61 per cent of the total live debt restructured cases. Infrastructure topped the list comprising 21.11 per cent of the total debt being restructured at Rs 55,993 crore followed by iron and steel at 19.14 per cent with an aggregate value of Rs 50,779 crore, power at Rs 19,709 crore (7.43%), construction Rs 18,644 crore (7.03%), textiles at Rs 16,350 crore (6.16%).