The pressure on banks to cut the interest rates following the RBI moves have also narrowed down the growth in the net interest margins to 11.9% from 15.9% year ago
Non-performing assets (NPAs) of banks have surged by 43.1% to a whopping Rs1.79 trillion in the first nine months of the current fiscal, ratings agency Care said on Thursday
“The major problem confronting banks remains the NPAs which have grown by 43.1% on top of a similar growth last year,” Care’s analysts said in a note.
In absolute terms, they have risen to Rs1.79 trillion from Rs1.25 trillion a year ago, it said.
The analysts identified the low growth in industrial sector as one of the primary drivers.
However, provisions, which had risen 38.7% last year, have grown only 4.1% this year, data from Care revealed.
The pressure on banks to cut the interest rates following the RBI moves have also narrowed down the growth in the net interest margins to 11.9% from 15.9% year ago.
“There has been pressure to lower interest rates when the RBI has either cut rates or lowered the CRR. This had an impact on the net interest margins,” the report said.
The overall credit growth for the banks for the first 10 months was 9.5%, helped by a healthy increase in January, it said.
Among the sectors, the credit to consumer durables dipped 12.5% due to the elevated interest rates, it said.
“Quite clearly the high interest rate environment had come in the way of creating demand for consumer durable goods,” it said.
Credit cards, motor vehicle loans and housing loans witnessed an increase in growth rate during the period, it said.
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