PSU Banks' Bad Loans Improve in March Quarter

India has seen an improvement in state-run banks' bad loans in the last quarter, a senior finance ministry official said on Tuesday, and the government is now examining ways to help the banks raise fresh funding.

India's worst economic slowdown since the 1980s and higher interest rates are making it tougher for companies to repay loans, leading to a steady growth in non-performing assets, especially among state-run banks.

Bad loans had come down "drastically" in the housing sector, Financial Services Secretary G.S. Sandhu said.

Stressed loans in India - those categorised as bad and restructured - total $100 billion, or about 10 percent of all loans. Fitch Ratings expects stressed assets to reach 14 percent of loans by March 2015.

Copyright: Thomson Reuters 2014