New Delhi : Banks may require an incremental provisioning of 20 per cent against cumulative debt of 50 large stressed assets worth over Rs 4.3 lakh crore in construction, power, metals and other sectors that constitute about half of the gross non-performing assets of the banking sector, noted a recent joint study by ASSOCHAM-Crisil titled ‘IBC – Protecting stakeholders, improving ease of doing business.’
The study also noted that while banks may have already provisioned for a part of these exposures, they need to adequately capitalise to absorb such losses which could fuel credit growth and support the next leg of economic growth, a report said.
It also impressed upon the need to address various challenges such as inter-credit conflicts, ability of large corporates to delay the recovery process, burden on the National Company Law Tribunal (NCLT)/ Debt Recovery Tribunal (DRT), roll-out of the ecosystem including adequate number of tribunals, insolvency professionals and information utilities, a limited timeline for the formulation of resolutions and access to the secondary market in case of liquidation for successful implementation of the IBC. “The success of the code hinges on strengthening its ecosystem, which will help in protecting the interest of stakeholders,” noted the ASSOCHAM-Crisil.
