Rising of NPAs in Gujarat due to MSMEs and corporates: Report

New Delhi, Dec 14 (KNN) In the last one year, the Non-Performing Assets (NPAs) in Gujarat have risen by over 25% to Rs 39,289 crore and both Micro, Small, Medium enterprises (MSMEs) and corporates have contributed to this rise of bad loans, according to State Level Bankers’ Committee (SLBC) report.

The gross NPAs of banks in the state, at the end of September 30, 2018,  stood at Rs 39,289 crore which is 6.88% of the total loans amounting to Rs 5,60,870 crore, stated the latest report during a meeting.

Executive director of Dena bank, Ramesh Singh said, “Close to Rs 30,000 crores of NPAs in Gujarat are corporate loans. This also includes all loans over Rs 5 crore taken by MSMEs who fall in the priority-sector for the banks.”

“Many times an account goes bad because there are factors beyond the control of the borrower. There are equal number of people in the market who also misuse this facility,” Singh said,

He added, “In Gujarat, the highest number of defaulters is in the MSME sector.”

“MSMEs are sub-suppliers to larger corporates operating in the textile and infrastructure sectors. So if there is a slowdown among the larger corporates, MSMEs are bound to get affected,” Singh added.

 “For instance, there is a number of ginning mill loans that have turned NPAs in Rajkot where a number of banks are stuck,” he said.

“If I talk only about Dena Bank then about Rs 200 crore of loans extended to ginning mills have turned into NPAs,” Singh said.

Currently, there is an estimated Rs 2.5 lakh crore of corporate loans in Gujarat, of which about 11 per cent are NPAs.

As per RBI guidelines, any loan (both in priority and non-priority sectors) above Rs 5 crore are treated as corporate loans, said bankers.