Owing to high interest rate and slowdown in the economy, non performing assets (NPAs) with the public sector banks (PSBs) rose about 90 basis points year-on-year during 2012-13.
However, their peers in the private sector managed to avoid rise in NPAs because of better risk management and low exposure to risky sectors.
The restructured assets of the PSBs rose 250-300 basis points during 2012-13 as corporates increasingly went for restructuring their loans.
Punjab National Bank and Canara Bank reported the maximum increase in restructuring. Among private lenders, Axis Bank showed a marginal increase. The rise in stressed assets resulted in interest income reversals, which impacted the net interest income.
However, some industry watchers feel that the likely interest rate cuts owing to moderating inflation, and the aggressive stance adopted by managements to scale up recovery could help asset quality improve this fiscal.
Private banks fared better in terms of the rise in net interest income (NII), which expanded 24 percent for them compared to a growth of just 5 percent for PSBs.