The 93% reported fall in profits from Punjab National Bank has returned the spotlight to the issue of bad loans in India, as its banking system struggles under $100bn of stressed loans, which is in turn impacting economic growth. Although state-run banks, who account for 70% of all outstanding bank loans, have borne the brunt, private lenders such as ICICI Bank have also been hit. In a report released on Wednesday, Credit Suisse said that banks had suffered losses worth Rs 1.06 lakh crore ($3.9bn) since April 2015, with most of this loss coming due to non-performing A large proportion of the loans being written off are from the steel and power sectors.
The 93% reported fall in profits from Punjab National Bank has returned the spotlight to the issue of bad loans in India, as its banking system struggles under $100bn of stressed loans, which is in turn impacting economic growth. Although state-run banks, who account for 70% of all outstanding bank loans, have borne the brunt, private lenders such as ICICI Bank have also been hit. India's banks have been battling with asset quality issues for months however the recent hike in bad loans has been attributed to the Reserve Bank of India's rule that banks treat some stressed borrowers as non-performing even if they have not yet defaulted. A large proportion of the loans being written off are from the steel and power sectors.