Non-performing assets to double in two years: ICRA--Economic times
MUMBAI: The non-performing loans in the banking system are set to double by June 2015 from 3.3% in March once the Reserve Bank of India's revised guidelines on bad asset classification come into force, ICRA said on Friday, a day after central bank issued the revised prudential guidelines on loan restructuring.
There could be a steep increase in the reported NPA percentage from 3.3% as on March 2013 to as high as 5.5-6.5% in June 30, 2015," it said in a report. The increase in bad loans, the rating company, said would be because the regulatory forbearance on classification of old restructured advances (except for project loans yet to achieve commencement of operation) would cease by April 1, 2015.
The RBI came up with new guidelines on restructured advances and non-performing assets (NPA) on Thursday. As per the new norms, standard account on restructuring will be immediately classified as NPA on restructuring from April, 2015, with certain exceptions.
On the stringent conditions imposed for restructuring by RBI, the rating agency said that restructuring would be more difficult, prompting unviable exposures to slip into NPA category.
It, however, noted that tighter norms for restructuring would increase transparency with access to more information for investors.
The RBI has said that provisioning on old restructured accounts has to go up to 3.5% as on March 31, 2014, 4.25% as on March 31, 2015, and further to 5% as on March 31, 2016, from the current 2.75%.
"As for 2013-14, if restructured advances get reduced by 20% from the March 2013 levels, there would be no impact on P&L of banks in FY14. However, medium-term profitability is expected to get impacted by 1-2 bps of average total assets on account of higher provision on restructured advances," it said.
The new guidelines, the rating agency feels, would also reduce the level of restructured advances and flow of restructured advances for most banks as they would have to restructure loans if the date of commencement of commercial operation is delayed by one year. Till then, the loan will be treated as a standard asset
http://articles.economictimes.indiatimes.com/2013-06-01/news/39675091_1_restructured-advances-new-guidelines-loan-restructuring
Each ED, CMD, GM, DGM and top ranking other powerful officials including that from RBI and Ministry have become wealthy and banks managed by them have become poorer year after year. Owners of big Corporate houses are billionaire but the loans sanctioned to them are bad in the books of bank accounts of banks. If Income tax authorities are asked to verify the assets of these powerful bankers, at least of all EDs and CMDs , the true story of large scale corruption will be exposed.. But it is not possible for IT officials or Ministry of Finance or Government of India because they are all participant and beneficiary of evil works of bankers directly or indirectly.
It is now when entire exercise of recognition of assets is being done by online CBS technology , bankers are constrained to declare their decade old bad accounts as Non Performing Assets. However clever bankers continue to resort to unofficial restructure of loan to conceal bad accounts in various branches .There are many branches where more than 25% of their total loans are truly NPA and at many branches even more than 50% to 75% of their total loan portfolio is bad . Even RBI officials do not want to read the truth and they become satisfied only getting a certificate of health from corrupt bankers.
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