Rs. 8 Lakh crore NPAs likely to undergo bankruptcy proceedings by March 2019: ASSOCHAM
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NEWS : Emboldened by the Banking Regulation (Amendment)
Ordinance, RBI
is expected to put bad loans worth about Rs 8 lakh crore for resolution by
March 2019, a move that could bring down the non-performing assets (NPAs) to
acceptable level and significantly improve the financial health of banks as
well, a study done by ASSOCHAM said.
So, it should be safe to assume
that the NPAs mess would largely be resolved by the first quarter of financial
year 2019-20. This would be helped by a combination of several factors -
turnaround in the economic cycle and some resolute steps by the government and
the Reserve Bank of India to fix the issue, ASSOCHAM study titled NPAs
Resolution: Light at the end of tunnel by March 2019.
Although entire NPAs could be put
on the altar of IBC resolution mechanism, it has to be seen how much and how
fast they actually goes out from the balance sheets of banks which at this
point of time seem very stressed, it said.
It is no secret that NPAs are a big
drain on the financial health of banks especially public sector banks (PSBs).
For example, 27 PSBs collectively
made an operating profit of Rs 1.5 lakh crore in 2016-17, but after allowing
for the provisioning for bad loans, among others, net operating profit slipped
to a paltry Rs 574 crore.
If balance sheet numbers are
anything to go by, it simply brings home the fact that banks have no capacity
to do fresh corporate lending that is necessary for pushing subdued private
sector investment, the study said.
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