In a worsening trend of companies failing to meet their financial obligations, the country's domestic banks have witnessed an increase of up to 85 per cent in their bad loans since the beginning of the current fiscal.
The sharp rise in bad loans for the banks comes at a time when the number of corporate debt restructuring (CDR) cases has also grown to record-high levels.
In the first two quarters of the current fiscal 2012-13, the banks referred a record number of 74 CDR cases, involving a total debt amount of Rs 40,000 crore, for restructuring.
At the same time, at least 35 banks have already reported an increase in their gross NPAs (Non-Performing Advances) from the levels recorded at the end of last fiscal, 2011-12, as per an analysis of the latest quarterly results announced by them.
The increase in gross NPAs has been as high as 60 per cent for lenders like PNB, Allahabad Bank and Lakshmi Vilas Bank, while the surge has been even higher for South Indian Bank (86 per cent) in the first half of current fiscal.
A few others like Bank of India, Indian Overseas Bank and Corporation Bank have also seen their bad loans grow by over 50 per cent in this period.
Collectively, these 35 banks have seen their gross NPAs grow by over 28 per cent or over Rs 32,000 crore in the first half of current fiscal, taking their total bad loans to Rs 1.47 lakh crore as on September 30, 2012, as per an analysis of financial results announced by the listed banks for the first two quarters of the current year.
The analysis does not include the foreign banks and unlisted domestic banks, as their figures were not available.
Incidentally, the collective gross NPA of these 35 banks at the end of first half of 2012-13 is higher than the total gross NPA at the end of last fiscal for the entire banking system, including foreign banks and unlisted domestic banks.
As per RBI data, the gross NPA for all the banks together in the country stood at Rs 1.42 lakh crore at March 31, 2012.
The Reserve Bank recently said the banks need to strengthen their due diligence and credit appraisal system along with overall monitoring mechanism to contain the rising bad assets seen in the banking system.
"Banks need to, not only utilise effectively, the various measures put in place by RBI and the government for the resolution and recovery of bad loans, but also have to strengthen their due diligence, credit appraisal and post-sanction loan monitoring systems to minimise and mitigate the problem of increasing NPAs," the RBI said in its report on 'Trend and Progress of Banking in 2011-12'.