After a considerable period, Non Performing Loans (NPLs) of the banking industry have witnessed downward trend falling by some Rs 18 billion during the first quarter of the current fiscal year. The NPLs of the banking industry were on higher side for last few years because of slow economic activities followed by energy crisis and poor law and order situation in the country, banker said.
However, the current decline in the NPLs is a good news as it reflects that industry has taken some serious steps to curtail the rising NPLs. Now banks are required to further focus on the recovery to reduce the NPLs, they added. According to the State Bank of Pakistan (SBP), the NPLs of the banking industry have declined to Rs 635.831 billion as on September 30, 2012 compared with Rs 653.982 billion as on June 30, 2012, depicting a decrease of 2 percent or Rs 18.15 billion.
The complete decline has been registered in banks' NPLs, while that of Development Financial Institutions (DFIs) continue to surge. The NPLs of all the banks posted a decline of 3 percent or Rs 18.82 billion in first quarter of FY13. With current decline, the NPLs of banks stood at Rs 617.144 billion in September 2012 from Rs 635.972 billion in June 2012.
During the period under review, the NPLs of DFIs moved up by 4 percent or Rs 677 million to Rs 18.687 billion from Rs 18.010 billion. The detailed analysis revealed that the NPLs of Public Sector Banks (PSBs) are on decline while that of Local Private Banks (LPBs) continue to post increase.
NPLs of PSBs fell by 13 percent during the first quarter of the current fiscal year. NPLs of PSBs decreased to Rs 170.78 billion in September 2012, compared to Rs 196.39 billion in June 2012, depicting a decline of Rs 25.6 billion. In addition, with an increase of 2 percent or Rs 7.59 billion, NPLs of LPBs reached Rs 403.506 billion level from Rs 395.912 billion.
Foreign banks' NPLs stood at Rs 8.120 billion as on September 30, 2012 from Rs 7.883 billion in June 30, 2012, depicting an increase of 3 percent or Rs 237 million in a quarter. Similarly, during the period under review, NPLs of Specialised Banks declined to Rs 34.733 billion from Rs 35.788 billion.