New Delhi, Jan 1 (KNN) Raising serious concerns on deteriorating asset quality of banks, a study stated that the bad loans are likely to rise further in 2014 as the lag effect on asset quality in relation to economic slowdown has not yet peaked.
 
The non-performing assets (NPAs) for the Indian banking system are likely to deteriorate further in the year 2014. 


"The situation is further expected to deteriorate as non-performing assets (NPAs) are expected to further grow by end of FY14 because there is a lag effect on asset quality in relation to the state of the economy," the study said. 

Gross NPAs as on September 30, 2013 stood at Rs 2,29,007 crore, 27 per cent higher as compared to Rs 1,79,891 crore as of March 31, 2013 for 40 listed banks, the study conducted by Assocham showed. 

Public sector banks are facing more problems than their private sector counterparts. The NPAs in public sector banks are growing due to external as well as internal factors, the study said. 

"There are many other causes which are also responsible for accumulation of NPAs like faulty credit management, lack of professionalism in the workforce, unscientific repayment schedule, mis-utilisation of loans by borrower, lack of timely legal solution to cases, political interference at local leve .. 


"Public sector banks share a disproportionate burden of the restructured accounts. An area of great concern is that at some point of time some of the restructured assets would slip to NPA," Assocham Secretary General D S Rawat said. 

Restructured accounts have grown at a compounded annual growth rate of 47.86 per cent in public sector banks. The corresponding figures for private sector and foreign banks are 8.12 per cent and 25.48 per cent respec .. 


According to RBI data, net NPA of the 26 public sector banks rose to 2.02 per cent during 2012-13 as compared to 1.53 in the previous fiscal. Net NPA of new private sector banks rose marginally to 0.45 per cent as compared to 0.42 per cent. (KNN Bureau)