The incremental non performing assets (NPAs) of top 10 banks dipped in the first half of the financial year. Bankers and analysts were worried about the asset quality and this dip in NPAs came as a big relief.

The gross NPAs for top 10 banks stood at Rs 3609 crore in the six months ending September 30, 2009 as against 5429 crore, a year ago. The net NPAs decreased to Rs 1,671 crore from Rs. 3,444 crore on year-on-year basis.

Concerns regarding the asset started arising in the second half of the previous fiscal but drew attention only after monetary tightening. This prompted the banks to go slow on unsecured loan lending.

Gross and net NPAs of Punjab National Bank (PNB), ICICI Bank and Union Bank of India have actually dipped in the past six months.

ICICI Bank, in particular, had seen a large volume of bad loans previous fiscal and had decided to restrain from aggressive lending till the time it reduced them. The bank has clearly reversed the trend of rising NPAs. But, its gross NPAs still constitute 4.7% of its advances, which is one of the highest in the industry.

Among the top-tier banks only Axis bank witnessed an increase in bad loans in first half of the fiscal as compared to the previous six months. Meanwhile, SBI saw lower growth in NPAs in the first half of this fiscal compared to the previous six months.

The regulator, RBI has also asked banks to increase their provisioning requirements for NPAs to 70 percent of the total deposits. RBI wants the banks to achieve this target by September 2010. Banks have, however, requested the apex bank to extend the deadline.