By Ankur Mishra
Seventeen banks are probably to have ratcheted up undesirable loans to the tune of Rs 7 lakh crore on a pro forma basis throughout the December quarter (Q3FY21). These 17 lenders had disclosed pro forma gross non-performing assets (GNPAs) this quarter due to the Supreme Court’s (SC’s) interim path for standstill on fresh NPAs. Of Rs 7 lakh crore, these lenders have reported GNPAs of Rs 5.95 lakh crore in the present quarter with out counting any fresh slippages. This implies Rs 1.04 lakh crore of undesirable loans in the method, which is however to be recognised by the banks. The apex court had earlier directed lenders not to classify fresh non-performing loans from August 31, 2020, till additional orders.
While the leading six public sector lenders have reported the majority of pro forma NPAs at Rs 5.12 lakh crore, the 11 private lenders have reported pro forma undesirable loans at Rs 1.88 lakh crore, with Yes Bank reporting the highest amongst private sector lenders at more than Rs 8,000 crore. Similarly, amongst the PSBs, State Bank of India reported highest pro forma NPAs of more than Rs 16,000 crore.
Anil Gupta- sector head, Financial Sector Ratings, Icra, mentioned the asset good quality pressures for banks have been probably to continue more than the next handful of quarters as the influence of numerous measures such as emergency credit line assure scheme (ECLGS) and the six-month moratorium wanes. “The performance of loans where disbursements have been done under ECLGS will be monitorable apart from the exposures towards working capital borrowings where the funded interest is required to be repaid by March 31, 2021,” he mentioned. The Reserve Bank of India had earlier granted moratorium of six months to borrowers from March 1, 2020. The banking regulator had also permitted lending institutions to convert the accumulated interest on working capital facilities more than the total deferment period of six months into a funded interest term loan, which can be completely repaid throughout the course of the economic year 2021 (FY21).
Care Ratings senior director Sanjay Agarwal mentioned, “We may see some increase in the gross NPA figures of banks in the next quarter, but overall it is likely to be lower than our estimate of 11-11.5% by the end of FY21.” It also depends on the path economy is going to take now, he added.
Last week, RBI had projected India’s gross domestic item (GDP) to contract by 7.7% in the present fiscal (FY21), but expects it to rebound at 10.5% in FY22. Veena Sivaramakrishnan, companion, Shardul Amarchand Mangaldas, mentioned, “The worst in terms of Covid-19 impact is hopefully behind all of us. But the asset quality problem is not the one of pandemic alone.” For the asset good quality to boost, there requirements to be discipline amongst the corporates and tightening of lending practices, each of which are altering the ‘set in stone practices’ to a wonderful extent, she added.