Public sector banks losses more than double in Q4FY18

Indian banking industry is in a restructuring mode with major NCLT accounts getting resolved and releasing huge amount of money struck as NPAs or provisions for NPAs. However, the public sector banks continue to remain a key risk for the banking system.

In the recent quarterly results, major PSU banks have posted huge losses due to large provisions provided against non-profitable loans. RBI’s directive to end all restructuring schemes has added pain to the public sector banks as it forces them to recognize restructuring accounts as NPAs.

Around 14 banks that reported their results recently posted losses for the quarter. The total amount of losses have touched  Rs. 44,000  crore in Q4FY18 vs Rs. 19,000 crore in Q3FY18. Punjab National Bank and SBI, country’s top PSU banks, have posted Rs. 13,000 and Rs. 7,700  crore losses in Q4FY18.

Still major banks like Bank of India, Bank of Baroda, IDBI bank, Indian Overseas Bank are yet to post results which may take the toll to Rs. 50,000 crore for the quarter. All these losses put together give a scary picture of the Indian banking system and the Indian economy as a whole. 

However, the key trigger for improvement is coming from the resolution of major defaulter accounts which are gradually getting resolved ahead of their deadlines.