Have Indian banks gone to the dogs?

As the Indian economy struggles to recover, the banking system is staring at a potential bad-loan crisis : At one Indian bank—Central Bank of India—bad loans exceeded 6% of total advances in the quarter ended 30 June. At six more banks, four of which are majority-owned by the government, gross non-performing assets (NPAs) were above 5% of advances. Gross NPAs of five other banks, all of them in the public sector, made up more than 4% of their loan books in June. After setting aside money to cover the risk of default, net NPAs of Dhanlaxmi Bank Ltd were in excess of 4% in June and those of seven others more than 3%. Net NPAs of State Bank of India and Punjab National Bank, two of India’s largest lenders, were close to 3%.

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