The Bank of Spain has said the country's bad loan rate shot up to a record of 9.42% in June.
More than €164 billion in loans to households and businesses are at least three months behind in their payments.
Spain announced in June that its banking sector, hit hard by a collapsed property bubble, needed a bailout.
Up to €100 billion in funds has been made available by the other members of the 17-country group that uses the euro, but has yet to be disbursed.
The increase from May was more than €8 billion, the second biggest monthly increase on record.
Spain is in its second recession in three years and the jobless rate is almost 25%. Many think it will end up requesting a full-blown sovereign bailout because of the government's soaring borrowing costs.
Spanish government bonds fall
Yields on Spanish government bonds fell today, with traders saying distortions in the repo market were feeding through to the cash market for the country's debt.
Spanish government bonds have been in short supply in the repo market, where banks commonly use them as collateral to raise funds, since domestic banks parked them at the ECB in return for cash - particularly the three-year loans.
"There is a big squeeze in the repo market ... so therefore people are scrambling to cover and that is giving a bid to the cash market," a trader said.
Spanish 10-year government bond yields fell 10 basis points on the day to 6.5%.
Five-year Spanish yields fell 20 bps on the day to 5.4%.
Spanish 2-year government bond yield fell 19 bps to 3.7%.