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Synopsis : PSBs forecast lower bad loans in FY25 due to strict loan policies. Despite private banks' retail focus, PSBs maintain resilience with corporate loans.
PSBs, enforcing tighter loan disbursal criteria, anticipate lower fresh slippage ratios in FY25 compared to private banks. Experts project a 1.5% fresh slippage ratio for PSBs, contrasting with 2.2% for private banks. This trend persists from FY24, where PSBs recorded a 1.3% fresh slippage ratio, notably lower than the 2% observed in private banks.
Various factors contribute to this performance gap. Private banks typically have a higher proportion of retail unsecured credit card and personal loans, along with exposure to micro, small, and medium enterprises (MSMEs). In contrast, PSBs have higher exposure to corporate loans, known for their resilience and stability.
Despite the projected lower fresh slippage ratio, PSBs are expected to maintain a slightly higher overall GNPA ratio of 2.3% by March 2025, compared to private banks' ratio of 2.1%.
This disparity stems from PSBs' implementation of stricter loan disbursal practices, ensuring compliance with predefined terms. For example, disbursement for a construction project now requires at least 90% land acquisition, a precautionary measure previously absent.
PSBs have also improved loan underwriting standards and enhanced monitoring mechanisms, including closer scrutiny of borrower transactions and balances across various Special Mention Account (SMA) categories. Furthermore, digital advancements enable PSBs to monitor retail loans sanctioned up to Rs 5 crore through mobile applications, enhancing visibility into borrower repayment trends.
