New rules to boost NPAs

Rating agency ICRA said that the revised framework on resolution of stressed assets issued by the Reserve Bank of India ( RBI) is likely to increase the reported non- performing assets ( NPA) levels of the banks in the coming quarters.

With 40 large accounts constituting 33 per cent of the gross non performing assets ( GNPA) of the banks already refereed by RBI for resolution under the National Company Law Tribunal ( NCLT), lowering the threshold for resolution under the revised framework to ` 2,000 crore per borrower according to the rating agency will enlarge the overall quantum of debt being resolved on fast track basis. According to data compiled by ICRA for around 50 large borrowers having banking exposure of ` 2,000 crore or more and will need resolution by September 1, 2018, the total borrowings stand at ` 2.46 lakh crore.

“Some of these accounts are already classified as NPAs and may not add to the overall stock of NPAs. However, if the resolution plan entails restructuring of the loans, the standard loans will get classified as NPAs. Also, if the resolution plan fails to get implemented by September 1, 2018, the banks will need to initiate proceedings under IBC against these borrowers,” it added.