Large borrowers account for 83% of NPAs

The Financial Stability Report (FSR) of Reserve Bank of India (RBI) has called for greater prudence while lending.

It said that large borrowers accounted for 54.6% of the total loan book while their share in the total gross NPAs was a whopping 83.4% at the end of the half year ended September 30, 2018. However, the industrial stress is under check with the slippages and restructured assets coming off, it said.

The top 100 hundred borrowers with an exposure (fund-based and non-fund based) of Rs 5 crore and above accounted for 16% of gross advances and 21.2% of non-performing assets of the banking system. However, the stress on the book of companies has come down from 30.4% in March 2018 to 25.4% in September 2018.

Among the broad sectors, the asset quality of industry sector improved in September 2018 as compared to March 2018 whereas that of agriculture and retail sectors deteriorated. The improvement in asset quality of the industry sector was marked by a reduction in fresh slippages in September 2018.

Banks have also put brakes on lending to risky assets. The risk-weighted assets as a ratio of total capital of commercial banks declined marginally from 13.8% in March 2018 to 13.7% in September 2018. The NPAs of the banking sector may come down from 10.8% in September 2018 to 10.3% by March 2019.