Indicating a tough year ahead for the country’s banking system, bad loans are likely to rise further in 2014 as the lag effect on asset quality in relation to economic slowdown has not yet peaked, reveals a study by industry body Assocham.
The study, which raises serious concerns on deteriorating asset quality of banks, found that slippages on NPAs show no signs of abating in 2014.
“The situation is further expected to deteriorate as non-performing assets (NPAs) are expected to further grow and reach Rs 1,50,000 mark by end of FY14 because there is a lag effect on asset quality in relation to the state of the economy,” the study said.
Gross NPAs as on September 30, 2013 stood at Rs 2,29,007 crore, 27 per cent higher as compared to Rs 1,79,891 crore as of March 31, 2013 for 40 listed banks, the study showed.
Public sector banks are facing more problems than their private sector counterparts. The NPAs in public sector banks are growing due to external as well as internal factors, the study said.
“There are many other causes which are also responsible for accumulation of NPA