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

Business Standard - - ECONOMY & FINANCE -

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.

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