Rising NPA bring more pain for PSBs

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Shivani
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Joined: Wed Jan 16, 2013 1:57 pm

Rising NPA bring more pain for PSBs

#1 Postby Shivani » Fri Jul 05, 2013 10:35 am

Over the past one month on fears of growing non-performing assets (NPAs) the shares of public sector banks (PSBs) such as Allahabad Bank, Indian Bank, Bank of India among others have crashed up to 25% in sectors like chemicals, pharmaceuticals, steel and textiles.

As the Indian economy is also finding it really tough to grow at 5%, then its unlikely for Banks also to deliver 15% to 20% earnings..and those who are doing so, are taking huge excessive risks.Recently, the government asked state-run banks to reduce lending rates, and clear stalled projects. If this happens, it may hit banks' net interest margins adversely and further add to the rising NPAs.

Even the pain for the PSU banks can increase due to a continuous non-performing liabilities, coupled with high restructuring, especially in the power sector, may add further pressure..The continuous decline in rupee against dollar is also a situation of severe stress for so many corporates, and which results in the low-asset quality with the banks.

So the PSU banks will continue to deteriorate further..whats your opinion..

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