CRISIL: Banks need to set aside ~3.3 lakh cr as NPA provisioning

Banks are likely to need nearly ~3.3 lakh crore this fiscal year (FY18) as provisioning for large non-performing asset (NPA) accounts, said a CRISIL report. The report said with the economic value of assets underlying NPAs eroding with time, and resolutions hard to come by, banks would need to step up provisioning, mainly for large corporate NPAs. It will facilitate faster clean-up of their balance sheets. “Our estimates show that banks would need to set aside close to ~3.3 lakh crore in FY18, or 50 per cent more than ~2.2 lakh crore they provided for NPAs in FY17,” CRISIL said in a report. The provisioning quantum was arrived at after an account-by-account analysis of the economic value of assets underlying large corporate NPAs. The potential write-downs could be in the 25-75 per cent range.