MUMBAI : Swelling legacy bad loans, which require lenders to set aside higher sums with every passing year, has emerged as a new worry for State Bank of India (SBI), indicating its limited success in recovering these loans. Legacy bad loans made up 65% of India’s largest lender’s overall bad loan portfolio in FY21, over 5 percentage points higher than the previous year. As bad loans fester, the chances of them being recovered also fade. The gross bad loan ratio is at the lowest level in five years, it said. However, the problem with selling older NPAs is that they tend to have a significantly lower recovery rate than fresh bad loans.

Source: Mint May 26, 2021 18:45 UTC