Breaking News

You are here » Indian-Commodity  :  Top News  :  Stressed assets level rises to 12% for banking industry in Q1 FY17

25-Aug2016

Stressed assets level rises to 12% for banking industry in Q1 FY17

The level of stressed advances which include Non Performing Assets (NPAs) and restructured assets for the industry rose to 12 per cent, but for the public sector banks (PSBs), it has jumped to 15.4 per cent as of June 2016. As a result the returns on assets for the public sector banks have turned negative and are in net losses during the quarter.

The net combined loss for the 25 listed PSBs was Rs 1,193 crore in the first quarter ended June 2016 against net profit of Rs 9,449 crore in April-June 2015. Reserve Bank of India Deputy Governor S S Mundra said credit growth has been tepid for many quarters and affecting interest income. A surge in slippages led to huge provisions and reversal of interest income. Governor said that some of the reasons for such miserable performance of the state-run banks are external and not in the control of the bank managements. An important lesson from such events is that in the absence of strong structural and governance reforms, consistency of the performance would always remain susceptible to such events.  He stressed that the prevailing priority is to complete the ongoing clean-up process of the state-run bank's balance sheets.

Deputy Governor said that continuity of top management is crucial, as there is a five-year term for a state-run bank chief executive officer and initial appointment can be for three years with certain milestones as riders for extension. If these milestones were achieved or a satisfactory explanation was available for not achieving these, at the end of the third year, there should be an automatic extension for another two years without any questions being asked. He added if there is a reasonable tenure, it allows someone to prepare a strategy and see that it is implemented. If the tenure is very short, there may be an inclination to postpone the problem because it can be handled by the next generation.


Related News

View all news

Crude oil futures end lower on Monday

Crude oil futures ended lower on Monday as steep declines in the US stock market fed an aversion to so-called riskier assets, which include oil. Meanwhile, the US-China trade dispute escalated as China......

Gold futures trade flat on Monday

Gold futures was trading flat on Monday as growing uncertainty over whether the United States and China will be able to reach a deal to end their escalating trade war fueled safe-haven demand for the precious......

Jeera futures trade higher on rising demand

Jeera futures traded higher on NCDEX on the back of rising physical and export demand at the spot market. However, higher availability of crop this season, capped some gains.The contract for May delivery......

Top News

View all news

SRF, NIIT Technologies and United Bank of India to see some action today

SRF has entered into a definitive agreement to sell its Engineering Plastics Business to DSM, the Life Sciences and Materials Sciences Company in an all-cash transaction, amounting to Rs 320 crore. The......

NIIT Technologies concludes sale of 88.99% stake in ESRI India Technologies

NIIT Technologies has concluded the sale of 88.99% equity shares in ESRI India Technologies, India to Environment Systems Research Institute Inc., USA. Consequent to above sale, ESRI India Technologies,......

United Bank of India to raise Rs 1,500 crore by various means

United Bank of India has received approval to raise equity capital not exceeding Rs 1,500 crore in one or more tranches during the financial year by way of Qualified Institutions Placement, Public Issue,......