Eleven state-owned banks under Prompt Corrective Action (PCA) regime are inching towards gaining stable asset quality. Sequentially, the asset quality profile of these banks seems to be gaining some stability.
Their gross non-performing assets declined in the second quarter (Q2) over the first, indicating that pace of fresh slippages is slowing. Banks have also written off many bad loans for which they made 100 per cent provisions.
Also, net NPAs and the amount of bad loans yet to be provided have also shrunk sequentially. The provisions for bad loans made in the second quarter were less compared to Q1.
However, their net loss have remained elevated in the second quarter. In fact, it rose to Rs 101.97 billion in Q2 from Rs 98.72 billion in the previous quarter. The net interest income has shrunk sequentially since their loan book is growing at a slow pace or contracting in some cases.