NPAs likely to come down by this fiscal, but assets over Rs 1 lakh crore still not recognised as bad loans

Nearly half of Rs 4.1 lakh crore of stressed assets are part of power, infrastructure and steel sectors put together.

Even as gross non-performing assets (NPAs) are expected to come down marginally by end of ongoing fiscal, assets over Rs 1 lakh crore that are under pressure are still to be recognised as bad loans, a report said. Assets to the tune of Rs 1.3 lakh crore that are estimated to be under stress are yet to be recognised as NPAs, a joint report by ASSOCHAM-CRISIL titled ‘Bolstering ARCs’ said. Adding, it said that the gross loans of the banks are likely to come down marginally to Rs 9.1 lakh crore from Rs 9.4 lakh crore as on March 31, 2019. “Over and above this, assets of around Rs 1.3 lakh crore are estimated to be under stress but have not been recognised as NPAs, these assets could potentially slip into NPAs over the near to medium term,” the report added.

Nearly half of Rs 4.1 lakh crore of stressed assets are part of power, infrastructure and steel sectors put together. The power sector accounts for the largest proportion, and resolution in this sector has not been to a significant level.

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Meanwhile, the banks have limited their NPA ratio at 9.1 percent in FY19 down from 11.2 percent a year before on account of early recognition and resolution of stressed assets, said the RBI report of 2019. The fresh slippages have also come down and as a result, the system-level provision coverage ratio has rose to 60.9 percent during the period. “Steadfastly pursued recognition, repair and resolution resulted in the gross NPA ratio declining to 9.1 percent in FY19 from 11.2 percent in FY18,” it added.