Crisil, in its latest research report, has warned that Indian banks may see a deterioration in their asset quality, while their collective gross non-performing assets (NPA) ratio may increase to 3.6% in 2010-11 from 2.3% in 2008-09. More restructured assets are likely to turn non-performing in the near term.
In the wake of the global economic slowdown, the Reserve Bank of India (RBI) has allowed banks to restructure some of their standard assets to help particularly small companies tide over the crisis. Many of the small and medium enterprises faced a squeeze in cash flows, which impacted their capacity to repay loans.
As of March 2009, the value of assets restructured by banks stood at Rs 76,500 crore. Restructured assets as a percentage of total advances are estimated to have increased to 3.4% in 2009-10 from 2.5% in 2008-09.
Crisil predicted that some of these restructured assets would eventually turn into non-performing assets, leading to higher gross NPAs in the near term.
Crisil expects net NPAs to rise by 30 basis points between 2008-09 and 2010-11, despite higher provisioning. It said banks would need Rs 62,000 crore over the next two years to achieve 65% provision coverage by 2010-11. RBI, as a prudential measure, told banks to improve their provision coverage to 70% by September 30, 2010.
In 2008-09, banks had a provisioning coverage ratio of around 57.2% on an average.
+1.jpg)
0 comments
Post a Comment