Gujarat NPA doubles in three years to Rs 39,289 cr, says report

Bad loans in Gujarat stand at Rs 39,289 crore, indicating a rise of almost 94 per cent in three years, according to a recent report by the State Level Bankers Committee (SLBC). This is also the fourth consecutive quarter that bad loans have witnessed an upward trend.

While overall, bad loans constitute 6.88 per cent of total lending in the state, bankers say that they form over 10 per cent of Corporate Loans and MUDRA loans as well. MSME bad loans stand at Rs 8,526 crore or 7.4 per cent. This indicates that non-repayment of loans is across sectors and sizes of business.

Ramesh Singh, executive director of Dena Bank, said sectors such as cotton ginning, textiles, infrastructure (including real estate) have been badly affected, resulting in non-repayment of loans. "Big companies are adversely affected by slowdown," said Singh, "So small businesses who deal with these companies are also affected. The effects of demonetization and Goods and Services Tax (GST) are still visible."

He informed that total corporate loans in the state are estimated at Rs 2.5 lakh crore, of which NPAs (Non Performing Assets) are estimated to be around Rs 30,000 crore. This also includes a part of loans given to MSMEs. "NPAs in corporate loans stand at about 11 per cent," he added. "Similarly, NPAs in MUDRA loans (for micro enterprises) stand at about 10 per cent of total loans."

"This indicates that the entire value chain in an industry is affected by bad loans," says Bhagyesh Soneji, chairperson of Associated Chambers of Commerce and Industry of India (ASSOCHAM), Gujarat. "Also purchasing capacity has not increased, which has directly affected demand and caused a slowdown. The government should have a sustained dialogue with the masses rather than the classes."

"This means that there is a decline in overall profitability in the economy," says Hemantkumar Shah, economist and principal of Shri H.K. Arts College. "If small and big businesses are affected, there is an overall slowdown in the economy. Moreover, if businesses are unable to repay old loans, fresh investments are out of question."

LOAN SHEDDING

94% – Rise in bad loans in 3 years

6.88% – Bad loans stake in total lending

Rs 8,526 cr – MSME bad loans