Bad Loan Ratio Rises In Retails Loans As Well, Says Report

Even as banks continue to focus on retail loans, as they keep away from the large corporates due to their poor credit quality, a study has found an uptick in non-performing assets across many sub-segments of small loans in the year to March 2017.

Education loans and commercial vehicle loans reported one of the biggest spikes in the proportion of NPAs, while the auto segment saw a dip in bad loans, says a report by credit information company Crif High Mark.

The housing loan portfolio of banks as a whole clipped at 18.27 per cent in fiscal 2017, but the gross NPAs in this segment also grew to 1.77 per cent from 1.44 per cent a year ago, says the report.

The educational loans portfolio grew 6.13 per cent but the quantum of NPAs shot up to 11 per cent from 8.09 per cent in the week before, the report said.

In case of commercial vehicle loans, the book grew by a whopping 45 per cent during the year, but was accompanied by a surge in NPAs as well, which rose to 6.32 per cent from 4.26 per cent earlier.

Similarly, the property loans portfolio grew nearly 40 per cent but this high growth was accompanied with a spike in NPAs too, which rose to 3.29 per cent from 2.63 per cent in the previous year, it said.

The only segment that showed some immunity to the broader trend of surging NPAs in the retail lending book was auto loans, where the portfolio grew by over 24 per cent but the proportion of NPAs came down marginally to 4.44 per cent from 4.56 per cent in the year-ago period, it said.

Since fiscal 2015, it can be noted that, there has been a massive slowdown in corporate credit, both due to the demand side as private investment slows down and also a reluctance from the NPA-wary bankers to lend to the segment which has contributed a bulk of the current pain.

This has forced banks to concentrate on the retail lending book where demand continues to be strong and the asset quality troubles have not been so high, so far.