Mumbai: On the face of it, India’s bad debt problem is improving.
Most banks have reported a smaller percentage of bad loans on their books in the last quarter, but that’s only possible because India’s Supreme Court barred banks from classifying any loans as non-performing assets from the start of September.
As well as reporting official gross bad loan ratios in their earning statements, banks are outlining how much the ratio would be if they’d mark the borrowing as bad. In almost every case, the ratio is much higher.
The Reserve Bank of India and lenders have opposed the order as they still need to provision for the soured loans, even though the ruling makes it harder for them to collect on the money they’re owed. The order is valid until the court announces it verdict on the issue, though a date hasn’t been set for the next hearing.
Here’s a look at the full extent of India’s bad loan problem in selected financiers:
| Bank | Reported bad debt (Sept. 30) | Reported bad debt (Dec. 31) | Actual bad debt (Dec. 31) |
|---|---|---|---|
| Axis | 4.18% | 3.44% | 4.55% |
| Bank of Baroda | 9.14% | 8.48% | 9.63% |
| Canara | 8.23% | 7.46% | 8.95% |
| HDFC | 1.08% | 0.81% | 1.38% |
| IDBI | 25.08% | 23.52% | 24.33% |
| Kotak Mahindra | 2.55% | 2.26% | 3.27% |
| RBL | 3.34% | 1.84% | 4.57% |
| Shadow Bank | Reported bad debt (Sept. 30) | Reported bad debt (Dec. 31) | Actual bad debt (Dec. 31) |
|---|---|---|---|
| Bajaj Finance | 1.03% | 0.55% | 2.86% |
–Bloomberg
Also read: IMF projects 11.5% growth rate for India in 2021, only country with double digit growth