Data from Reserve Bank of India (RBI) suggests that the ratio of restructured to gross advances is at a five-year post-Lehman high of 5 per cent for the banking system as a whole.
It may be recalled that in 2008-09, RBI allowed the “one-time” dispensation to restructure sub-standard assets and report them as standard.
This ratio has significantly deteriorated for non SBI nationalised banks and has jumped 250 basis points in the last one year, reports suggest. It is now perched at a long term high of 6.9 per cent. Second, the slippage ratio is also at a five-year high of 2.5 per cent.
It may be recalled that in the 2010-11 report, the RBI estimated that with a 25 per cent conversion rate to NPAs from the 2008-09 dispensation bucket, the gross NPA ratio for the commercial banking system would have hit 3.01 per cent by March 2011 (as against the then reported GNPA of 2.5 per cent).
Some analysts raise concern over the fact that new accruals to NPAs have been faster than reduction in existing NPAs due to lower levels of up-gradation and recoveries. This is in fact a vicious cycle which has the potential to accelerate systemic risk, reports indicate.
It may be noted that gross NPA ratio for state-run banks alone rose by 90 basis points in 2011-12. In this regard, experts calls for tighter credit risk standards, robust surveillance and post sanction monitoring of bank lending to mitigate further adverse effects.
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