Overleveraged corporates are set to give more headache to the banks. While banks have reported huge loan slippages in the last three quarters, the sector is sitting on Rs 3,30,000 crore of unrecognised stressed loans.
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Over the last three quarters, the banking system has witnessed slippage of Rs 4,00,000 crore of loans to non-performing assets (NPAs). “Aggregate NPAs of the sector are now at Rs 6,50,000 crore (8.6 per cent of loans) as of June 2016 and an additional Rs 2,60,000 crore (3.5 per cent) are restructured. However, we estimate another 4.5 per cent (Rs 3,30,000 crore) of stressed loans are still to be recognised as NPA/restructured,” Credit Suisse said in its ‘India corporate health tracker’ report.
Impaired assets at banks are now at 12 per cent (8.6 per cent NPAs and 3.5 per cent restructured), it added.
The power sector is the largest constituent of this unrecognised stress. Unlike the steel sector, recognition of impairment at banks is low on the power assets, with only 3-5 per cent of loans to the sector currently classified as NPAs.