Bad loans of public sector banks may rise to 10% by 2017: Gangwar

New Delhi, July 19 

Minister of State for Finance Santosh Kumar Gangwar on Tuesday, quoting the Financial Stability Report of the Reserve Bank of India (RBI), said bad loans of public sector banks (PSBs) may rise to 10.1 per cent by March 2017.

"As per the Financial Stability Report June 2016 of Reserve Bank of India, the macro stress tests suggest that under the baseline scenario, the gross NPA ratio for PSBs may rise to 10.1 per cent by March 2017," Gangwar said in a written reply in the Rajya Sabha.

The major reasons for increase in NPAs of banks are sluggishness in the domestic growth during the recent past, slowdown in recovery in the global economy and continuing uncertainty in the global markets leading to lower exports of various products like textiles, engineering goods, leather and gems, he said.

External factors, including the ban in mining projects, delay in clearances affecting power, iron and steel sector, volatility in prices of raw material and the shortage in availability of power and aggressive lending by the banks in the past, have also contributed to bank NPAs, he added.

The gross NPAs rose to 9.32 per cent (Rs 4.76 lakh crore) in 2015-16 from 5.43 per cent (Rs 2.67 lakh crore) in 2014-15, the minister said.