Over the last few years, banks in India have been going through a tough time, with bad loans accumulating at a very fast pace. Bad loans are in essence those on which a repayment has not been made for 90 days or more.

In an answer provided to the Indian Parliament, the government had said that the bad loans of Indian banks as on December 31, 2017, amounted to close to 9 trillion rupees. Recent media reports suggest that during the period January to March 2018, the bad loans of banks had increased by 1.3 trillion rupees, taking the overall bad-loans figure to more than 10 trillion rupees (US$148.5 billion).

Up to now the problem of bad loans has been limited largely to the government-owned banks. But now the private banks seem to be joining their public-sector counterparts on this front.

Axis Bank, which is country’s third-largest private bank, saw its bad loans grow by 92.5 billion rupees during the period January to March 2018. In case of ICICI Bank, the country’s second-largest private-sector bank, the bad loans grew by 80.2 billion rupees during the same period.

Of course, this growth in bad loans of private banks was small in comparison with that of public-sector banks. State Bank of India, the country’s largest bank, saw its bad loans go up by 242.9 billion rupees. In case of Punjab National Bank, the second-largest public-sector lender, the bad loans grew by a whopping 291 billion rupees.

The bigger question here is whether the recognition of bad loans by Indian banks in general, and public-sector banks in particular, has come to an end. Or are there more skeletons in the closet?

A few public-sector bankers have tried to assure the country that the worst is behind us. Rajnish Kumar, chairman of the State Bank of India, recently said: “The industry has gone through a challenging phase and State Bank of India is no exception. But I can confidently say that while last year was the year of disappointment, this will be the year of hope and next year will be the year of happiness.” The statement was made after the bank declared its results for the period January to March 2018.

Despite this assurance, doubts of whether the public-sector banks are done declaring their bad loans remain. There are multiple reasons for this.

Such assurances have been made in the past as well. In fact, Chanda Kochar, the chief executive of ICICI Bank, had said as far back as July 2014: “There will be some addition to non-performing assets [bad loans] … but I think these additions in [fiscal year 2014-15] should be less than the additions in FY13-14. In that sense, we can assume that the peak is behind us and gradually now there should be an improvement.”

Clearly, things didn’t work out like that, with bad loans going up big time between 2014 and 2018.

It is safe to say that the Reserve Bank of India (RBI), the banking regulator, has no idea of the total level of bad loans. It publishes a Financial Stability Report twice a year (in June and December). In these reports, India’s central bank, over the last few years, has constantly revised the overall bad loans-figure of Indians banks upward.

Dr K C Chakrabarty, a former deputy governor of the RBI, has famously remarked that a more realistic figure of the overall bad loans of the banks is around 20 trillion rupees.

As per Chakrabarty’s contention, the bad loans of Indian banks still have a long way to go.

Over and above these points, what does not help is that banks have a good exposure to the power and telecom sectors. The loans given to these sectors could turn bad in the days to come, as these sectors are currently going through a tough time.

Interestingly, this is a possibility that the RBI is awake to. In the latest Financial Stability Report (released in December 2017), the central bank suggests that bad loans arising from the power sector could have a significant impact on the profitability of banks.

Along with all this, there is another worry that no one really is talking about. Banks have more or less stopped lending to corporates and are giving out more and more retail loans.

In 2017-18, 48.6% of the loans given out by banks were retail loans. Now compare this with 2009-10, when only 5.3% of the loans given out by banks were retail loans.

This substantial jump in retail loans couldn’t have happened without some compromise on the quality of loans being given out. The overall bad-loans ratio of retail loans hasn’t reached a worrying stage. It’s still a little over 2%.

Nevertheless, there are more than a few public-sector banks where the retail bad loans have gone up substantially over the last few years.

Of course, given the fact that currently everyone is concentrating on the bad loans banks have accumulated from lending to corporates, nobody is really worried about this new set of bad loans. Even if they are worried about it, they aren’t talking about it.

But then, just because a problem is not being talked about doesn’t mean it does not exist.