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Rise in Indian banks' bad loans 'unacceptable' - finance minister

India's Finance Minister Palaniappan Chidambaram speaks during an interview with Reuters in New Delhi October 7, 2013. REUTERS/Anindito Mukherjee

NEW DELHI (Reuters) - The rise in bad loans at Indian banks is "unacceptable," the finance minister said, adding he expects their non-performing assets (NPAs) to come down when the pace of economic growth picks up.

Indian state-run banks' credit growth has been "satisfactory" and is expected to remain so for the rest of the fiscal year, while housing loans have shown a "very healthy" growth, P. Chidambaram told reporters on Tuesday.

A slowing economy has adversely affected the demand for credit and led to a rise in bad loans at Indian banks. Net NPAs to net advances ratio of state-run lenders slipped to 1.8 percent at end-March 2013 from 1.5 percent a year earlier.

Rising bad loans have made banks more wary in lending, impeding the supply of domestic credit.

(Reporting by Rajesh Kumar Singh; Editing by Malini Menon and Anand Basu)