Mumbai : Crisil Ratings Thursday said banks have only recognised two-thirds of their stressed loans as non-performing assets, and estimated the bad loan ratio to rise by 1 percentage point to 10.5 per cent by March 2018. The 9.5 per cent NPA figure for March 2017 includes only two-thirds of the overall stressed assets, it said. The agency said it estimates the total amount of stressed loans, which includes NPAs and standard assets that are under pressure currently and could deteriorate into NPAs, to be at Rs 11.5 trillion or 14 per cent of the system.
Assets under pressure comprise the not-yet-recognised bad loans, which are recognised as NPAs in one bank, but not in others, restructured standard accounts, and stressed assets structured under schemes, such as the strategic debt restructuring, the 5/25 and the S4A, it said.
“Gross NPAs will be 10.5 per cent of advances by March 2018, up from 9.5 per cent in March 2017,” it said adding that infrastructure, power, engineering, and construction sectors contribute bulk of the stressed assets. Faster resolution of stressed accounts through the Insolvency and Bankruptcy Code and various structuring schemes, is critical to improving the asset quality of banks, the agency said. The report, however, said over the medium-term, a big increase in stressed loans is unlikely on factors like higher commodity prices, lower interest rates, improved capital structure.