The recent crises at Infrastructure Leasing & Financial Services (IL&FS) and Jet Airways that rocked corporate India hit state-owned banks hard and they continue to bleed over bad loans.

IL&FS, a major infrastructure financing and construction company, defaulted on some of its debt obligations last year, triggering concerns that it might lead to the collapse of the country’s financial system and markets. IL&FS has 169 group companies and had total liabilities of 910 billion rupees (nearly US$13 billion), 61% of which was in the form of bank loans. The crisis at IL&FS rocked bond and stock markets.

Read: Indian infrastructure group’s crisis may hit pensions

As for Jet Airways, the full-service airline ran into losses following competition from low-cost carriers, rising fuel costs and adverse exchange rates.

The 25-year-old airline, promoted by Naresh Goyal with Etihad Airways as minority stakeholders, was taken over by its lenders, led by the State Bank of India, but they are struggling to find a buyer. That has resulted in its planes being grounded due to lack of cash to meet daily operational expenses.

Chastened by these two corporate bankruptcies, a group of state-owned banks has set aside 500 billion rupees ($7.1 billion) in the March quarter for existing and potential loan losses. The huge size of the provisions suggests the cycle of non-performing assets (NPA) is not over yet, the Financial Express has warned.

The loan-loss provisions across 13 state-owned banks stood at more than 527 billion rupees ($7.5 billion) for the 2019 Fiscal Year fourth quarter, sharply higher than the 296 billion rupees ($4.2 billion) in the preceding third quarter. Most of these lenders reported losses for the March quarter, with total losses of eight banks at nearly 152 billion rupees ($2.16 billion), the daily added.

The country’s largest public bank, State Bank of India, has classified 11.25 billion rupees ($160 million) of the total IL&FS exposure of nearly 35 billion rupees ($496 million) as a non-performing asset, along with 12 billion rupees (nearly $171 million) of exposure to Jet Airways. The bank’s loan-loss provision for fourth quarter FY19 stood at 165 billion rupees ($2.35 billion), a four-fold jump over the 60 billion rupees ($854 million) in the preceding third quarter.

For eight of the 13 state-owned banks, the loan-loss provisions far exceeded net interest income in the March quarter. The cumulative net income interest for the 13 lenders stood at 433 billion rupees ($6.16 billion) against the 527 billion rupees ($7.5 billion) of loan-loss provisions.

It is worth noting that the Reserve Bank of India initiated a Prompt Corrective Action (PCA) framework to discipline banks with a record of poor financial performance.

In early 2018, there were 12 banks under the PCA framework, 11 of which were state-owned. Later, the government injected capital into the troubled state-owned banks and undertook several steps to improve their performance.

As a result by March 2019, there were only six banks (all state-owned) under the PCA framework.