Breaking News

You are here » Indian-Commodity  :  Economy  :  Banks may require 20% extra provisioning for 50 large NPAs: ASSOCHAM-CRISIL study

04-Aug2017

Banks may require 20% extra provisioning for 50 large NPAs: ASSOCHAM-CRISIL study

A joint study carried out by the industry body Associated Chambers of Commerce & Industry of India (ASSOCHAM) and rating agency CRISIL has stated that in order to absorb any losses, banks may require an incremental provisioning of 20 percent for 50 large stressed assets worth over Rs 4.3 lakh crore. These 50 large accounts are from the sectors such as construction, power and metals, among others and constitute about half of the gross non-performing assets (NPAs) of the banking sector. It 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.

The report titled 'IBC - Protecting stakeholders, improving ease of doing business' has said that there is a need to address various challenges such as inter-credit conflicts, ability of large corporates to delay the recovery process and burden on the National Company Law Tribunal (NCLT)/Debt Recovery Tribunal (DRT). It also said that 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 are needed in case of liquidation for successful implementation of the IBC.

ASSOCHAM-CRISIL study noted that the success of the code hinges on strengthening its ecosystem, which will help in protecting the interest of stakeholders, instilling financial discipline among borrowers and create a robust platform to attract investors. It said though the IBC is expected to face teething troubles before fully taking off, its stakeholders are expected to reap greater benefit in the long run. It added that along with banks and asset reconstruction companies (ARCs), the IBC will benefit corporates, professionals and employees, boost investor confidence, and facilitate deepening of the domestic corporate bond market.


Related News

View all news

India one of the fastest growing large economies in the world: IMF

Emphasizing on several key reforms carried out by India in the last five years, the International Monetary Fund (IMF) stated that the country has been one of the fastest growing large economies in the......

Govt increases investment limit for availing income tax concessions by startups

The government has given a major relief to startups by enhancing definition of startups. It has decided to relax angel tax norms for startups, including increasing the investment limit to Rs 25 crore for......

India needs revolution in farm sector to achieve 9-10% GDP growth: Niti Aayog CEO

Niti Aayog CEO Amitabh Kant has stated that there is need to bring revolution in farm sector to attain 9-10% Gross Domestic Product (GDP) growth. He also said that there is a need to boost investment in......

Top News

View all news

Infosys to enter into agreement with The House Fund II

Infosys is going to enter into an agreement with The House Fund II, L.P., an AI-focused fund targeting startups from the University of California - Berkeley, committing to invest $10.0 million.......

EID Parry receives approval for investment Rs 70 crore in PSRIPL

EID Parry (INDIA) has received approval for investment upto Rs 70 crore in the equity share capital of Parry Sugars Refinery India (PSRIPL), a wholly owned subsidiary of the Company. The Board of directors......

SBI raises Rs 1,251 crore by issuing Basel III-compliant bonds

State Bank of India (SBI) has raised Rs 1,251.30 crore by issuing Basel III-compliant bonds. The Committee of Directors for Capital Raising at its meeting held on 22 March 2019 deliberated and accorded......