The Public sector banks in the industry have managed to control some of the non-performing assets (NPAs) in their books. During the first nine months of the fiscal, PSU banks have reported a fall in their bad assets even though the economic meltdown had increased the fear of rising NPAs.

Despite an increase credit flow of PSU banks, the bad assets have come down. As per data released by the finance ministry, NPAs of PSU banks at the end of December 2008 have declined to 0.88% of the total credit portfolio from 0.99% recorded at the beginning of the financial year. The gross NRA for the period under review has come down to 2.03% from 2.25%.

Though there has been a decline in NPAs in terms of percentage but in absolute terms the figures have increased. The total gross NPA of public sector banks for the nine months have increased to Rs 42,962 crore from Rs 40,611 crore. The net NPA have also moved up to Rs 18,486 crore from Rs 17,724 crore.

However it should be noted that NPAs are not judged on the basis of absolute figures. They are taken into account on the basis of percentage of NPAs. A senior official in the finance ministry said, "NPAs are linked to total credit offtake of the bank so it should be compared on percentage basis only."

Almost all the sectors including auto, micro, small and medium enterprises (MSME), infrastructure, agriculture and others have reported a fall in their NPAs. However the housing sector has noticed a rise in its NPA to 3.02% at the end of December 2008 from 3.01% at the beginning of March 2008.

Chairman of a PSU bank said, "We have seen a slight increase in the NPA for housing and consumer durable as people are finding it difficult to pay the installments on the back of huge job loss in many industries."

These figure look opposite to what has been anticipated by most bankers in the industry. Bankers expected that NPAs will rise in the coming times due to the financial turbulence across the nation that has resulted in an increased number of delinquencies. However the reports reflect that NPA portfolio of most banks has declined over the past few months.