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Crisil sees banks' restructured assets at Rs 4 lakh crore by FY14-end
Updated : Mar 19, 2018, 03:29 AM IST
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Sounding an alarm of the detoriating asset quality of banks, ratings agency Crisil has said gross non-performing assets will touch 4.4 % and the restructured book will balloon to Rs 4 lakh crore by the end of this fiscal.
"Gross NPAs (non-performing assets) were at 3.3 % in March 2013 and grew to 3.7 % by the June quarter. We feel they will grow to 4.4 % by March 2014," CRISIL Managing Director and Chief Executive Roopa Kudva said here over the weekend.
An NPA is a debt obligation where the borrower has not paid the interest and principal repayments to the lender for an extended period of time. Corporate Debt Restructuring (CDR) allows the reorganisation of a company's outstanding obligations.
Kudva said restructured assets, under which an account's repayment period is extended or interest payment delayed without classifying it as an NPA, will touch Rs4 lakh crore this fiscal, up from the Rs 3.1 lakh crore in March, 2013.
"The system will add up to Rs 1 trillion (lakh crore) of restructured assets during the fiscal and considering some assets will be reclassified during the fiscal, we feel the total component will touch Rs 4 trillion by March 2014," Kudva said.
In its annual report released last month, the Reserve Bank of India (RBI) had said the gross NPAs in the system will touch 4.4 % by the end of the fiscal.
"Our stress tests suggest that under a severe stress scenario, the gross NPA ratio of banks may rise to 4.4 % by March 2014 but even under such a scenario the system level capital adequacy ratio of banks will be 12.2 % only, which is well above the required 9 %," the RBI report had said.
One of the most important reasons for the rise in the asset quality stress is the economic gloom. The state-run banks have one of the most dismal records on this front, with some reporting gross NPAs of over 6 %.
There is also a concerted effort from the Finance Ministry to check the phenomenon of "wilful defaulters" to prevent assets slipping into the bad category.
