14 PSBs in govt’s hot list for high level of stressed assets

As many as 14 public sector banks have reported stressed assets — non-performing assets (NPAs) and restructured loans — of over 13.03 per cent of their advances, the average of weak assets of PSU banks during the period ended December 2014.

According to a report prepared by the Department of Financial Services in the Finance Ministry, Central Bank of India tops the list of 14 banks with 21.15 per cent of its advances stuck in NPAs and restructured loans.

It was followed by United Bank of India with 19.04 per cent of stressed assets, Punjab & Sind Bank 18.25 per cent, Punjab National Bank 17.85 per cent, Indian Overseas Bank 17.70 per cent.

“PSBs continue to be under stress on account of their past lending. Taking gross NPAs and restructured advances together the stress on PSBs is 13.03 per cent to total advances as of December 2014,” the report said. Gross NPAs of PSBs have risen to 5.64 per cent (Rs 262,402 crore) as on December 31, 2014 due to sluggishness in the domestic growth during the recent past, slowdown in global recovery and continuing uncertainty in the global markets leading to lower exports of various products like textiles, engineering goods, leather and gems, the DFS review said.

The ministry report said nine PSU banks have not formed Joint Lenders Forum (JLF) to tackle stressed accounts. They are: Canara Bank, Dena Bank, P&S Bank, PNB, Syndicate Bank, United Bank, Vijaya Bank, State Bank of Bikaner & Jaipur.

However, other banks have formed 254 JLFs as on February 26, 2015, out of which 107 JLFs were formed by State Bank of India. The DFS had sent two letters to PSU banks on the JLF issue. The Reserve Bank of India (RBI) had last year directed banks to mandatorily form a JLF if loans worth Rs.100 crore or more becomes due for more than 61 days. The RBI said lenders will be encouraged to form such joint forums even if the amount due is less than Rs 100 crore or principal or interest is due for more than 30 days.

“If some of the banks are not even taking interest to form JLF to tackle stressed assets, less said the better. The government and the RBI should force them to form JLFs,” said an official of a nationalised bank. The Ministry report says a total of 355 JLFs were formed by all the banks, including private banks.

businessThe report said the RBI has issued instructions to the banks to reviewslippages in asset classification in the borrowal accounts with outstanding of Rs 5 crore and above by the board of directors.

Banks have been issued instructions for devising a comprehensive strategy and its effective implementation as a key to achieve the target, it said.