India’s banking sector will be saddled with gross non-performing assets (GNPAs) worth a staggering ₹9.5 lakh crore by March-end, rising from ₹8 lakh crore a year earlier, a report said.
The high level of stressed assets in the banking system, however, provide enormous opportunity for asset reconstruction companies (ARCs) which are important stakeholders in the NPA resolution process, said the Assocham-Crisil study.
At the same time, it said, the growth of ARCs was expected to come down significantly owing to capital constraints. “While growth [of ARCs] is expected to fall to around 12% by June 2019, the AUM [assets under management] are expected to reach ₹1 lakh crore, and that is fairly sizable,” said the report.
It said GNPAs would increase to “₹9.5 lakh crore as on March 31, 2018, i.e. about 10.5% of total advances, while stressed assets are expected to be at ₹11.5 lakh crore.”
Separately, Minister of State for Finance Shiv Pratap Shukla had said in Parliament earlier that GNPAs of banks crossed ₹8.5 lakh crore at the end of September. The report further said that with banks expected to make higher provisioning over and above the provisions made for stressed assets, they may sell the assets at lower discounts, thus increasing the capital requirement.
