BANKS SHOULD MAKE A POLICY TO FIGHT MENACE OF NON PERFORMING ASSETS:

There has been seen many faces of changing banking sector in India and the aspects like interest rate deregulation, reduction in statutory reserve requirements, prudential norms for interest rates, asset classification, income recognition and provisioning, non performing assets needs to be addressed.Lending by the bank to any clients is processed on the basis of repayment capacity and viability of the projects. The supporting documentations has been always tough part for the borrowers to ensure banker that repayment capacity and will is there. There has been increment in the inastances the banks are not able to get their lending backs since the borrowers became defaulter and projects not sincerely pursued failed. The many of the loans become NPAs.

NON PERFORMING ASSETS OF 27 BANKS SURGES 25%.

Non Performing Assets have been major engima for most of the financial institutions. Gross non-performing assets of the banks also increased 20.6% to Rs.
34,503 crore. Net profit of these banks rose 28% to Rs 7,483 cr in Jan-Mar. Some PSBs are trying to recover the NNPAs as per RBI and its own recovery schemes.

AMIDST profit-making perfor-mances, bad loans of the banks increased significantly in the fourth quarter of the last fiscal. Net non-performing assets (NNPAs) of 27 banks increased by 25.4% to Rs 15,218 crore during January to March 2009, from Rs.12,138 crore recorded in the year-ago period.

Gross non-performing assets of the banks also increased 20.6% to Rs.34,503 crore.Net profit of these banks rose 28% to Rs 7,483 crore in Jan-Mar '09. Some PSBs are trying to recover the NNPAs as per RBI and its own recovery schemes.For example, Oriental Bank, Indian Bank, IDBI Bank and State Bank Of Taravancore have reduced their NNPAs during the period.

IDBI Bank recovered the highest amount of Rs 134 crore during the fourth quarter by bringing down the margin  to Rs.949crore from Rs. 1083 crore.
Significant increase in NNPAs was seen in Yes Bank, South Ind Bank, State Bank of Hyderabad and Indian Overseas Bank. The NNPAs of Yes Bank increased by 386.5% to Rs. 41.16 crore in Jan-Mar'09.

The average NNPAs to net advances ratio of 27 banks increased to 0.84% in Jan-Mar' 09 from the year-ago figure of 0.75%. A significant increase in the ratio was seen in the case of Bank of Baroda, ICICI Bank, Indian Overseas Bank, ING Vysya and South Ind Bank.

The NNPAs to net advances ratio of Bank of Baroda increased to 1.41% in Jan-Mar '09 from 0.47% in the corresponding period of the last fiscal. A highest decline in the ratio was registered in the case of IndusInd Bank. The ratio of NNPAs to net advances of the bank decreased to 1.14% from 2.27%. The net
non-performing assets of IndusInd Bank decreased by 38.4% (highest among the 27 banks) to Rs 179.13 crore in Jan-Mar'09 from Rs. 291.02 crore.

Romesh Sobti, MD & CEO of IndusInd Bank, said, “Despite a challenging and deteriorating operating environment, the bank has shown improvement in all the key parameters covering loan recovery, profitability,productivityandefficiency." The top five banks according to the ascending order of the ratio of NNPAs to advances

in Jan-Mar '09 are ICICI Bank,Bank of Baroda, Indian Overseas Bank, Central Bank of India and INGVysya. In Jan-Mar '08, the top five were Indus Ind Bank,ICICI Bank,Central Bank Of India, IDBI Bank and OrientalBank.

Two banks, namely ICICI Bank and Central Bank of India are common in both the time period in the list of top five. The highest and lowest NNPAs observed in Jan-Mar '09 were by ICICI Bank at Rs 4,554 crore and Dhanalakshmi Bank at Rs.28 crore, respectively.