The gross and net non-performing assets of 13 private banks have increased by a 36.5 percent and 36.1 percent respectively during the financial year 2008-09.

Compared to their private sector peers, the public sector banks have witnessed much lower growth rate in the bad loans. The GNPAs and NNPAs of the public sector banks increased by a 11.7 percent and 17.9 percent respectively during the FY2008-09.

The growth in NPAs of the private banks is explained based on the increased retail lending by the private banks. Loan restructuring and financial intermediation by the central banks has been also responsible for greater credit exposure and sticky loans. Earlier this year, the Reserve Bank notified the banks that all the accounts which have received a proposal for restructuring (by March 31), should be treated as standard assets. It was further notified that these accounts will not require any provisioning and should not be classified as 'non-performing'.

PSBs with a major share of corporate borrowings have been able to work around the norms. SBI, major public sector lender, restructured nearly 50,000 small and medium enterprise loans. Dena Bank and Bank of India restructured loans worth Rs 5,350 crore and Rs 4,800 crore respectively.

The loan portfolios of the private banks mainly encompass the retail loans, where restructuring is difficult. Amongst the private banks, Yes Bank has shown the highest growth in NNPA, followed by South Ind Bank. The NNPA of the major private lender, ICICI Bank increased to Rs 4,554 crore during FY2008-09.

Non-Performing Assets (NPAs) are critical indicators of the asset health of the banks. Larger NPAs implies greater risk exposure.