Strengthening Indian Banking Industry through NPA Management

On May 18, 2016, Punjab National Bank (PNB), the third largest Public Sector Bank (PSB) in India, reported Rs. 53.67 billion quarterly losses in the quarter that ended in March 2016 against the Rs. 3.06 billion profits for the same period in 2015. This was the largest ever quarterly loss reported by any bank in India. PNB also reported a steep rise in Gross Non-Performing Assets (GNPAs), which increased from 8.47% of advances in the previous quarter to 12.9% of advances in the fourth quarter of financial year 2016 (FY16) . In value terms, NPAs had increased by Rs. 214.8 billion to Rs. 558.18 billion in the fourth quarter of FY16. PNB also increased provisioning for bad debts from Rs. 32.81 billion in the fourth quarter of FY15 to Rs. 113.8 billion in the fourth quarter of FY16.

PNB was not the only bank to report this kind of performance. All Scheduled Commercial Banks (SCBs), especially PSBs, reported higher NPAs in FY16.