<p>The net non-performing assets (NPAs) of the banking sector in India are increasing at an alarming rate and may cross Rs 2 lakh crore for the fiscal year ending March 2013 from Rs 1.57 lakh crore as on June 30, 2012, according to a study commissioned by industry body Assocham. <br /><br /></p>.<p>Also, banks’ restructured advances would also be as high as about six per cent by March, 2013.<br /><br />The study titled ‘Growing Heat of NPAs on Banking Sector’ released by RBI Deputy Governor Dr K C Chakrabarty at a function here on Friday said the continuing pressures on Indian economy would result in pushing the NPA ratio from 2.94 in June, 2012 to about 3.75 by the end of the current fiscal. <br /><br />“A plethora of issues like rising trends in stress assets, increased provisioning, issues of asset quality and challenges of requisitioning additional capital to keep growing business together with burgeoning twin deficits of fiscal and current accounts have collectively contributed to this dismal situation of increased NPA levels and falling bottom line,” according to the study. <br /><br />“Besides, the credit offtake has also sharply tanked due to various issues like environment-related approvals, land acquisition and other such issues,” it said, adding,“Existing exposure of banks to poor performing sectors like power, aviation, highways, micro-finance institutions (MFIs), ports, telecommunication and others have lead to high levels of stress assets.”<br /><br />Growing inability to raise adequate equity in a time-bound manner due to high volatility and depressed condition on capital markets is straining companies’ balance sheets and financial flexibility of players in vulnerable sectors like infrastructure, construction, iron and steel, textiles, engineering and others, which has resulted in increased likelihood of restructuring.<br /><br />The government, the study continued, is expected to further liberalise restructuring norms to give adequate financial support as well as reasonable time-frame to restructure the debts including concessions in interest rates and other reliefs. <br />“Further, the banks must support all reasonable restructuring proposals to enable the industries to restore their activities,” the Assocham report added.<br /></p>
<p>The net non-performing assets (NPAs) of the banking sector in India are increasing at an alarming rate and may cross Rs 2 lakh crore for the fiscal year ending March 2013 from Rs 1.57 lakh crore as on June 30, 2012, according to a study commissioned by industry body Assocham. <br /><br /></p>.<p>Also, banks’ restructured advances would also be as high as about six per cent by March, 2013.<br /><br />The study titled ‘Growing Heat of NPAs on Banking Sector’ released by RBI Deputy Governor Dr K C Chakrabarty at a function here on Friday said the continuing pressures on Indian economy would result in pushing the NPA ratio from 2.94 in June, 2012 to about 3.75 by the end of the current fiscal. <br /><br />“A plethora of issues like rising trends in stress assets, increased provisioning, issues of asset quality and challenges of requisitioning additional capital to keep growing business together with burgeoning twin deficits of fiscal and current accounts have collectively contributed to this dismal situation of increased NPA levels and falling bottom line,” according to the study. <br /><br />“Besides, the credit offtake has also sharply tanked due to various issues like environment-related approvals, land acquisition and other such issues,” it said, adding,“Existing exposure of banks to poor performing sectors like power, aviation, highways, micro-finance institutions (MFIs), ports, telecommunication and others have lead to high levels of stress assets.”<br /><br />Growing inability to raise adequate equity in a time-bound manner due to high volatility and depressed condition on capital markets is straining companies’ balance sheets and financial flexibility of players in vulnerable sectors like infrastructure, construction, iron and steel, textiles, engineering and others, which has resulted in increased likelihood of restructuring.<br /><br />The government, the study continued, is expected to further liberalise restructuring norms to give adequate financial support as well as reasonable time-frame to restructure the debts including concessions in interest rates and other reliefs. <br />“Further, the banks must support all reasonable restructuring proposals to enable the industries to restore their activities,” the Assocham report added.<br /></p>
