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Charts: Bad Loans: 25 Banks put together have Rs 2.77 trillion Gross NPA, Rs 1.64 trillion Net NPA


The NPA saga is not yet over. Bad loans are piling up.

The 25 Banks that have released results, have increased their Gross NPA by 81.18% and Net NPA by 95.79% from March 2015.

On a quarterly basis 25 Banks put together have increased their Gross NPA by 32.36% and Net NPA by 36.72% from Dec 2015.

Gross NPAs = the loans that are 3 months (or more) delayed in principal or interest, as a percentage of all loans.

Net NPAs = Gross NPAs minus provisions, as a percentage of all loans (minus the loans already provisioned for). While calculating Net NPAs the banks can reduce any amount already collected (like if they had shares as collateral, how much ever they recovered from that etc).

You can also read our previous post on bad loans of banks.

The major problem areas being the loans given to Iron and Steel Sector, Energy and Textiles.

The two charts below represent the Gross NPA and Net NPA percentages.


Gross NPA percentage India Banks FY 2015 2016


Net NPA percentage India Banks FY 2015 2016


  • Punjab National Bank is has the highest Gross NPA of Rs 55,818 Cr on its balance sheet for the current fiscal (12.90% of the total advances are NPA). It has net NPA of  Rs 35,422 Cr ( after provisioning, still 8.61% of gross advances are NPA).
  • The second and third highest gross NPA among the list being ICICI Bank (Gross NPA- Rs 28,821 Cr ; Net NPA- Rs 14,445 Cr), Union Bank of India (Gross NPA- Rs 24,171 Cr ; Net NPA- Rs 14,026Cr)
  • UCO bank is way ahead in the league in terms of NPA%, It has 15.43% gross NPA and 9.09% Net NPA. Followed by United Bank of India (Gross NPA % –  1.26% ; Net NPA % – 9.04%)and  Punjab National Bank (Gross NPA %-  12.90% ; Net NPA %- 8.61 %)
  • The best performers are Yes Bank, IndusInd and HDFC, with all below 1% NPA (Gross as well as Net).
  • RBI has asked the banks for at least 15% provisioning of SDR loans.
  • Still, some banks have not released the data. SBI might race ahead in terms of NPA, But we cant say anything as of now. We will wait for their results.

To view the details of the NPA in Indian banks please click here.

Punjab Government asks for Rs 5000 Cr Waive Off from the Banks

To add to the NPA woes of the bank, the Punjab government has apparently asked banks to waive off Rs 5000 Cr out of the Rs 20000 Cr loan taken. The loan was taken for the procurement of food grains, and FCI was to refund the money – but FCI has not found the food grains that were purchased, so they won’t pay . The Reserve bank have already ordered the banks to provision 15% of loans given to the Punjab government for this.

The consortium of banks led by State Bank of India are reluctant to add more NPAs to their books, and in turn Punjab government has asked the banks to convert the loans to 20 year bonds with a coupon rate of 7% (which is less than banks lending rate of 8%). The banks are unwilling to take the waive off, but are willing to issue the bonds if the coupon rate is increased. If the provisioning would have taken place then it would have been in two quarters with 15% and 10% each, but the banks have stood firm on their ground and are willing to schedule a meeting to renegotiate the coupon rate.

Regardless, this is a hit to banks, and will have to reflect appropriately on the books. This is now additional provisioning that may be required once these negotiations are done.

NPAs, Bad Loans and Provisioning aren’t yet behind us. With RBI giving FY17 as the year that banks have to recognize the really bad stuff, we expect more quarters of pain.



Nothing in this newsletter is financial advice and should not be construed as such. Please do not take trading decisions based solely on the matter above; if you do, it is entirely at your own risk without any liability to Capital Mind. This is educational or informational matter only, and is provided as an opinion.


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