Bad loans in Indian banks shrinking
Wednesday, 04 August 2004, 19:30 IST
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NEW DELHI: The loan quality of India's banking system has improved in the last couple of years as reflected by lower levels of bad loans, said global credit rating major Standard and Poor's Wednesday. "Absolute non-performing assets in the Indian banking system have shrunk for two consecutive years," said Adrian Chee, associate director (Financial Services Ratings Group) of Standard and Poor's. "The improvement is all the more commendable given the stricter classification standards for non-performing loans," Chee wrote in an article on Indian banks. "The risk profile of Indian banks' loan books has also eased gradually, with a growing shift toward the retail sector, in particular residential mortgages." The absolute level of non-performing assets in the Indian banking system fell three percent and four percent in fiscal years ended March 31, 2003, and 2004, respectively, said the rating agency. This is in contrast to a trend of an average six percent growth a year in fiscals 2000-02. The agency said the fall in bad loans was due to several factors including high treasury profits, which allowed banks to write off their bad debt more aggressively, and improved recoveries helped by better economic conditions. "Going forward, the credit quality of the Indian banking industry is expected to continue to benefit from the reforms initiated by the government over the recent years," said Chee. "This will continue amid the more favourable operating environment as a result of the continued economic recovery, improved provisioning, and a broad framework for resolving non-performing assets."
Source: IANS
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