Foreign banks operating in India appear to have enjoyed a phenomenal run in 2005 and outpaced their domestic counterparts in reducing the level of non-performing assets (NPA’s), both in gross and net terms, while the private sector banks came in second, according to a recent study by Assocham.
The foreign banks (after witnessing a continuous rise in NPAs for two consecutive years) had drastically slashed their gross NPAs by 32 per cent in 2004-05 as against a rise of four and two per cent in the years 2002-03 and 2003-04 respectively.
The private sector banks had also registered a decline in their NPAs by 30 per cent in 2004-05 as against a decline of 21 per cent in 2003-04, said the study.
In addition to gross NPAs, the foreign banks had shown a significant improvement in reducing their net NPAs by 38 per cent in 2004-05 (year-on-year basis) while the private sector banks had reduced their net NPAs by 18 per cent in 2004-05.
Assocham president Anil Agarwal said, "It goes to the credit of the banks that they have improved their asset quality despite aggressive growth in their advances, particularly in the retail sector."
Among the scheduled commercial banks (SCBs), the foreign banks again topped the list in providing the cushion of provisions against NPAs, constituting 63 per cent of gross NPAs. A significant improvement in recovery of the NPAs and a sharp increase in gross loans and advances for SCBs, led to a sharp decline in the gross NPAs to gross advances ratio.
The foreign banks (after witnessing a continuous rise in NPAs for two consecutive years) had drastically slashed their gross NPAs by 32 per cent in 2004-05 as against a rise of four and two per cent in the years 2002-03 and 2003-04 respectively.
The private sector banks had also registered a decline in their NPAs by 30 per cent in 2004-05 as against a decline of 21 per cent in 2003-04, said the study.
In addition to gross NPAs, the foreign banks had shown a significant improvement in reducing their net NPAs by 38 per cent in 2004-05 (year-on-year basis) while the private sector banks had reduced their net NPAs by 18 per cent in 2004-05.
Assocham president Anil Agarwal said, "It goes to the credit of the banks that they have improved their asset quality despite aggressive growth in their advances, particularly in the retail sector."
Among the scheduled commercial banks (SCBs), the foreign banks again topped the list in providing the cushion of provisions against NPAs, constituting 63 per cent of gross NPAs. A significant improvement in recovery of the NPAs and a sharp increase in gross loans and advances for SCBs, led to a sharp decline in the gross NPAs to gross advances ratio.