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| Edited By: |Source: DNA |Updated: Jan 26, 2018, 05:55 AM IST
Efforts by the government to rein in bad loans have begun to yield positive results. Bad loans that include non-performing assets (NPAs) as well as restructured or rolled-over loans eased 0.4% from three months earlier to Rs 9.46 lakh crore at the end of September, said Reuters quoting unpublished data by the Reserve Bank of India (RBI).
Bad loans hit a record Rs 9.5 lakh crore as of end-June last year, accounting for 12.6% of total loans. The new data shows that the ratio declined to 12.2% in the period to end-September.
Asset quality reviews of banks undertaken by the RBI since 2015 had exposed several skeletons hidden in their balance sheets. Subsequently, the central bank forced banks to push over 40 large corporate defaulters into bankruptcy proceedings. Analysts now believe that the stressed assets ratio is unlikely to go up sharply from the current levels.
The move by the government to recapitalise bad loans-hit public sector banks with a $33 billion programme and a series of efforts to check the mounting NPAs are expected to make life easier for the lenders. Global rating agencies Moody’s and S&P believe that the capital infusion is a good move but it alone cannot be the panacea for problems that plague the state-owned banks. What we need is a transparent reform roadmap.
