Federal Bank, CSB Bank part of ‘low-NPA club’ with 0.6% and 0.51% respectively
CL Jose
MUMBAI: The Indian banking system witnessed its lowest-ever net NPA of 0.6 per cent as the financial year 2023-24 (FY24) closed on March 31, according to official data released by the Reserve Bank of India (RBI).
Only two banks from Kerala could better or match this number in FY24. While Federal Bank matched the industry average of 0.6 per cent in net NPA ratio, that of CSB Bank was far better at 0.51 per cent as of end-FY24.
Despite South Indian Bank’s (SIB) prolonged efforts to address the persistent issue of non-performing assets (NPA), its net NPA remains at 1.46 per cent of its loan book as of March 31, 2024.
While Dhanlaxmi Bank nurses a net NPA of 1.25 per cent that of ESAF Small Finance Bank was 2.26 per cent as of March 31, 2024. Of course, the credit for CSB Bank’s lowest NPA ratio among the state-headquartered banks should, to a good extent, go to its nearly 50 per cent-strong gold loan book.
“The banking sector’s good show at tackling NPA indicates adequate loan loss provisioning by the banking system in the country,” said the RBI Governor Shaktikanta Das while addressing analysts in Mumbai on Friday.
NBFC too contained NPA
The non-banking financial companies (NBFCs) also displayed strong financials in line with the banking sector. Notably, the gross non-performing assets (GNPAs) of scheduled commercial banks (SCBs) and NBFCs are below 3 per cent of total advances as at end of March 2024.
Provisional data relating to scheduled commercial banks (SCBs) for March 2024 suggest that their GNPA ratio dipped to 2.8 per cent. At the same time, the net non-performing assets (NNPA) ratio declined to its lowest ever indicates adequate loan loss provisioning by the banking system.
The provision coverage ratio (PCR) (without write-off adjusted) of SCBs rose to 76.5 per cent at end-March 2024 as compared with 75 per cent a year earlier.
Stressed assets ratio
SCBs stressed asset ratio – gross non-performing assets (GNPA) ratio plus restructured advances ratio, was at 3.6 per cent, the lowest level since March 2008.
Capital to risk-weighted asset ratio (CRAR) of SCBs at 17.4 per cent also remained well above the regulatory requirement. Their headline profitability indicators, viz., return on asset (RoA) and return on equity (RoE) were 1.1 per cent and 12.3 per cent, respectively, at end March 2024.
The liquidity coverage ratio (LCR) of SCBs remained comfortable at 130.3 per cent, much above the minimum stipulation of 100 per cent, as of March end, 2024..
