Fitch sees level of NPAs, recast loans rising to 15% in FY15

Tags: News
International rating agency Fitch today said the level of stressed loans of domestic banks, including restructured debt, may continue to rise and reach 15 per cent by the end of this financial year from over 10 per cent in 2013-14.

"Fitch expects the domestic banks' asset quality to weaken further, with stressed assets to rise from 10 per cent at mid-2013 to around 15 per cent by the end of FY15," it said in a note.

Stressed assets, which include gross non-performing assets and restructured debt, stood at 10.2 per cent as of September.

In its report focused on banking in emerging markets, Fitch said the "downside risks are greatest" in China and India. The agency said state-run banks will be the most affected.

The state-run banks will require Rs 3.8 trillion or $ 60 billion in capital till 2019 for migrating to Basel-III guidelines, it said, adding that the extension given to implement the higher capital norms will provide a breather.

The reasons cited for the deteriorating quality of assets at banks include slackening economic growth, intervention by the judiciary, delays in project approvals leading to a sense of 'policy paralysis' and high interest rates.

The Reserve Bank of India and the government have flagged this as a major concern and have initiated steps, including a new policy for early detection and resolution of bad loans, which was implemented from April 1.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • This is right time for retail investors to enter the debt market

    Quite often, retail investors are ridiculed for entering the equities market in droves, signalling the first signs of a bubble on the Street.

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Arun Nigavekar

Cost of education must be controlled

In India, we pay very little attention to the cost ...

Zehra Naqvi

What imperfections in nature teach man

Each one of us has faced a time when we ...

Dharmendra Khandal

A wondrous world under the ground

Burrows and dens are safe homes for many kinds of ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture