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The quantum of bad loans registered in Gujarat have increased by 2.5 times. At the end of June 2017, the gross NPAs or Non-Performing Assets (NPAs) of all the banks in the state crossed the Rs 35,000 crore-mark, which is more than double the numbers registered in June 2014.

The rising bad loans in the MSME and the agriculture sector have adversely affected performance of banks in Gujarat, reveals the latest report released after a meeting of State Level Banker’s Committee (SLBC)- Gujarat on Saturday. The gross NPAs of banks in Gujarat stood at Rs 35,342 crore which is 7.4 per cent of the total loans provided by the banking sector. In comparison, the quantum of NPAs as on June 2014 stood at just Rs 14046 crore which was 4.03 per cent of the gross advances.

At the end of March 2017, the NPAs in Gujarat stood around Rs 30,475 crore. Within just three months, there has been a 16 per cent jump in bad loans. The NPAs in MSMEs, crop loans and agricultural term loans- that fall under priority lending -have more than doubled when compared to June 2014.

“There is no credit off-take, which indicates that there is continued moderation in the economy. The total credit off-take in March 2017 was 6.6 per cent and this quarter (April-June 2017) it is just 3.79 per cent growth… This is not too good, because we had clocked 23 per cent growth in credit off-take during the year 2013-14,” said Vikramaditya Singh Khichi, convenor of SLBC-Gujarat.

The credit off-take has been on the downhill since the end of March 2014. At the end of March 2014, the growth in advances of banks in Gujarat stood at 23.79 percent. This growth rate fell to 12.61 per cent by March 2015, thereafter it slid to 11.31 (March 16) and turned into a ingle-digit growth (6.60 per cent) by the end of March 2017. According to bankers, the poor performance of textiles, steel, cement and infrastructure sectors in Gujarat have contributed to the NPAs. “In the corporate sector the NPAs in Gujarat are more than eight per cent,” Khichi remarked.

Compared to the total advances, the NPAs in MSMEs, agriculture term loans and non-priority sectors in Gujarat have all crossed the eight per cent mark “For an individual banks, when NPAs hit the eight per cent mark, it is a trigger point to take prompt corrective actions,” the SLBC official said. In Gujarat, banks like Indian Overseas Bank (32%), Allahabad Bank (28%) and UCO Bank (22.5%) have the highest percentage of NPAs.

“Over a period of time we are looking at containing the fresh slippages. Very stringent monitoring is going on. Whatever slippages happened have transparently been declared as NPA,” Khichi added.

Despite the rising NPAs, there has been a 10 per cent year-on-year growth in the quantum of loans extended to MSMEs and Agriculture sector in Gujarat. In August, the Gujarat government had organised a formal function and had provided Rs 730 crore as financial incentives to 16000 MSME units wanting to expand or set up new units in the state.

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