Banks may have to take a haircut of 60 per cent, worth ₹2.4 lakh crore, to settle 50 large stressed assets with debt of ₹4 lakh crore, according to an analysis by credit rating agency Crisil.
The 50 large stressed companies are from the metals (30 per cent of total debt), construction (25 per cent), and power (15 per cent) sectors, and account for half of the ₹8 lakh crore non-performing assets (NPAs) in the banking system as on March 31, 2017. The agency estimated that banks have provisioned for about 40 per cent of this loan exposure.
India’s banking sector is now reeling under duress with a pile of Rs 8 lakh crore bad loans dragging down banks’ profit margins. Hesitant lenders now drag their feet to expand their credit book as an element of uncertainty weighs on their polic
Crisil has classified the haircuts into four categories — marginal (less than 25 per cent), moderate (25-50 per cent), aggressive (50-75 per cent), and deep (greater than 75 per cent). A quarter of the debt analysed needs marginal or moderate haircuts, while a third needs aggressive, and nearly 40 per cent, deep haircuts.
Source: ET, Business Line