NEWS & ADVICE : PERSONAL LOAN
Do rising NPAs reflect an ailing banking sector?
By Vaibhav Aggarwal
Print    Email    RSS   

Non-performing assets (NPAs) reflect performance of banks. A high level of NPAs loans is indicative of a large number of loan defaults that affects the profitability and net worth of banks. Growth in NPAs necessitates larger provisions, thus reducing the overall profits and shareholders value.

Rising NPAs is a big concern for the Indian banking sector. According to Associated Chambers of Commerce and Industry (Assocham), the net non-performing loans have risen by an average 26 percent in the second quarter of current fiscal as compared to corresponding period previous year. The net NPAs of India's largest private lender, ICICI stood at Rs.4,553.94 crore as on March 31, 2009 as compared to Rs. 3490 crore on March 31, 2008, an increase of nearly 30 percent. The situation in public sector banks is similar. Amidst rising NPAs, the banking regulator, RBI has directed the public sector banks to increase the provisioning requirements to 70% to provide a cushion against loan losses.

Reasons for rising NPAs

Relaxed lending standards: Inappropriate personality-morale profile assessment of the prospective and current customers is one of the reasons for rising defaults on loans.

Aggressive selling of unsecured loans: The increase in bad loans can also be attributed to aggressive unsecured lending by banks. Rise in non-performing loans in case of ICICI was due to change in its retail loan portfolio mix towards non-collateralised loans. The net non-performing loans in the collateralised retail portfolio were 1.59% of net collateralised retail loans and net non-performing loans in the non-collateralised retail portfolio (including overdraft financing against automobiles) were about 10.08% of net non-collateralised retail loans.

Legal Issues: There have been instances when banks have extended loans to doubtful debtors. Loopholes in the legal system and insufficient internal control mechanisms have intensified this problem.

Market failure: Another reason for the rise in NPAs is said to be the global financial meltdown and its impact on India.


Page  | 123 |  
(Comments Posted : 11) Post Your Comments
1. Hello Dear,
Are you in debt? Do you need an instant funding? Do you dream of owning a house, Car and good Business? Do you need a loan ahead for the Christmas family vacation? Have you been in search of a legitimate loan and been turned down severally? If YES" Search no further.
We offer Personal/Commercial loans at 2% interest rate without collateral. get instant Approval even with bad credit.
Serious and interested applicants should please contact us via email today:lim.koh56@yahoo.com and be free from all your financial troubles.
NOTE:we will save you from payday loans that are making billions from the prey of the poor.
Best Regards.
Mr.Lim Koh
lim koh (Posted: Dec 11, 2014)
2. Merci d'avance et bonne chance, www.rupeetimes.com! :) wish you all the best in 2014!
Delilah (Posted: Jan 4, 2014)
3. I find difficult to increase the size of my biceps despite I train almost every day at the gym. I wonder if there is any method that would help me do it in a natural way without taking anabolics or steroids. Thank you in advance for your help..
steroids prescription (Posted: Aug 29, 2013)
Show All Comments
COMPARE QUICKLY
 Select a product:
 

CALCULATE QUICKLY
 Select a product:
 

EDITORS' PICKS
Personal loan: Lender of the last resort
Get a loan to meet your any personal need
Effect of employment on loan eligibility...
Know about Form 16
An analysis of alternatives to personal loans


ईस्ट देव love+91 8740965315 problem...
ईस्ट देव love+91 8740965315 problem...
ईस्ट देव+91-8740965315 ~Love Problem...
Jalandhar Call Girls - 08196881150 , Jalandhar, Call...
Amritsar Escorts 08196881140 Amritsar Call Girls...
+91-8698693666, 09665330222 WhatsApp Or Call Pune...

NEWS THIS WEEK
Syndicate bank assisting the women entrepreneurs Dec 18, 2014
Axis bank launched first women branch in Patna Dec 17, 2014
SBI rolling a new Tech learning centre in Dimapur Dec 16, 2014
6th excellence Banking Award in Kerala Dec 15, 2014
Bajaj Allianz will work as the loan protector for the union bank’s Customers Dec 12, 2014
News Archive