Non-performing assets (NPA) of public sector banks rose sharply to 5.33 per cent of total advances in September 2014 mainly due to sluggishness in the economy and other factors, including delay in environmental clearances.
The gross NPAs of state-run lenders stood at 4.72 per cent of total advances at the end of March 2014. The main reasons for increase in NPAs of banks are sluggishness in the domestic growth during the recent past, slowdown in recovery in the global economy, uncertainty in the global markets, delay in environmental permits..., Minister of State for Finance Jayant Sinha said in a written reply to the Lok Sabha.
Besides, external factors like ban in mining projects, and aggressive lending by banks in the past, especially during goods times, were among the reasons for rise in stressed assets, he added. He further said that the cancellation of coal blocks in September 2014 and its impact on the asset quality of banks depends on the time of resolution of this issue.
The government has ascertained that the impact of cancellation coal block allotment on PSBs due to likely stoppage of production of power plants is estimated at Rs 96,484 crore. The net NPAs of PSBs at the end of September rose to 3.14 per cent, from 2.74 per cent in March 2014.