Non-performing asset recognition to get prolonged till FY20, may rise by Rs 5.24Lakh-crore

MUMBAI: Non-performing asset recognition is likely to get prolonged till the next fiscal year and can put Rs 5.24 trillion debt in FY19 at risk increasing the potential bad loan stress, says a report. The RBI had last month come out with the guidelines stipulating that from April 2019, minimum 40 per cent of fund-based limits of a borrower is required to be structured in the form of a ‘loan component’ with a fixed maturity.  It can be noted that a majority of analysts as well as the RBI are expecting that the dud asset recognition cycle has peaked and wanting to focus on the resolution. Under its base case scenario, the GNPA ratio of all banks may come down to 10.3 per cent by March 2019 from 10.8 per cent in Sept 2018. India Ratings said, the roll out of the new guidelines “can put at risk Rs 5.24 trillion debt in FY19, which could result in a rise in potential stress and extend NPA recognition cycle for banks to FY20.”