Banks' non-performing assets rise: Assocham

New Delhi, Nov 7 (UNI) When Prime Minister Manmohan Singh, in an apparant bid to infuse confidence in the wake of global financial meltdown, assured people that their bank deposits are safe, he was not off the mark.

But an analysis of second quarter reports filed by commercial banks has revealed a rise of 24 per cent in their non-performing assets (NPAs).

Similarly, the economist Prime Minister was also correct when he informed the Parliament that Indian banks are well capitalised.

Yet the analysis commissioned by an industry chamber said capital adequacy ratio (CAR) of Indian banks had declined by 2 per cent in the second quarter of current fiscal. However, this is still above the 9 per cent threshold prescribed by banking's international norms laid down in Basel II.

The rise in NPAs and dip in CAR, Assocham said, do not portray a healthy picture of commercial banks in the country.

Basing an analysis on reporting by 15 public sector and 10 private banks, Assocham said aggregate net NPAs of 25 banks increased by 24.36 per cent to Rs 17,522.82 crore in second quarter of 2008-09 from Rs 15,462.84 crore in the same period of the previous fiscal, while their CAR declined to 12.68 per cent from 13.41 per cent.

''Although the Indian banking sector has remained insulated from the global financial crisis, the emerging trends as found in the study do not give positive signals,'' Assocham added.

UNI SAA SBA BD1622