Business Economy 06 Jun 2018 Banks gross NPA may ...

Banks gross NPA may peak at around 11.5 per cent this fiscal: Crisil

DECCAN CHRONICLE.
Published Jun 6, 2018, 1:04 am IST
Updated Jun 6, 2018, 1:04 am IST
The rating agency expects gross NPAs in the banking system to peak at around 11.5 per cent of advances this fiscal and then start reducing.
Crisil noted that the higher provisioning and the resultant losses have materially eroded the Rs 1.2 lakh crore of capital raised by PSBs last fiscal.  (Representational Image)
 Crisil noted that the higher provisioning and the resultant losses have materially eroded the Rs 1.2 lakh crore of capital raised by PSBs last fiscal. (Representational Image)

Mumbai: As much as Rs 5 lakh crore of bank loans deteriorated into non-performing assets (NPAs) in fiscal 2018, taking the total slippages in the past three fiscals to Rs 13.6 lakh crore, rating agency Crisil said on Tuesday. 

According to it, about a fifth of the slippages last fiscal was due to withdrawal of various structuring schemes by the Reserve Bank of India (RBI) in February 2018, after the Insolvency and Bankruptcy Code process came into force. As a result, gross NPAs increased to Rs 10.3 lakh crore, or 11.2 per cent of advances, as on March 31, 2018, compared with `8 lakh crore, or 9.5 per cent of advances, as on March 31, 2017. 

 

The rating agency expects gross NPAs in the banking system to peak at around 11.5 per cent of advances this fiscal and then start reducing. 

Last fiscal, the banking system reported net loss of Rs 40,000 crore because of the sharp rise in NPAs and the resulting increase in provisioning costs. 

PSBs bore the brunt of this with their provisioning costs nearly twice pre-provisioning operating profits, which resulted in a net loss of Rs 85,000 crore.

“Prospects of recovery from stressed accounts referred to the National Company Law Tribunal (NCLT) are improving. More than a quarter of the Rs 3.3 lakh crore worth of cases referred to NCLT for resolution are from the steel sector, which has seen heightened bidding interest due to improving prospects for the sector,” said Krishnan Sitaraman, senior director, Crisil. 

 

Crisil noted that the higher provisioning and the resultant losses have materially eroded the Rs 1.2 lakh crore of capital raised by PSBs last fiscal. 

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