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Rs 2.6 tn of bank credit may slip in next 12-18 months: IndRa

Press Trust of India  |  Mumbai 

Domestic rating agency Ratings and Research today said the system has Rs 7.7 trillion of unrecognised stressed loans in corporate and SME sector and expects around 35 per cent of them to slip into the NPA category in the next 12-18 months.

"Indian banks are sitting on unrecognised stressed loans worth of Rs 7.7 trillion. We estimate that potentially Rs 2.6 trillion of corporate and SME loans, which is 3.2 per cent of total credit, will be recognised as stressed loans by fiscal 2019," the rating agency said in a webinar here today.

It pegs stressed corporate and SME debt at 22 per cent of total credit.

The recognised stressed corporate and SME loans in the system currently stands at around 12 per cent of total credit.

The agency said the total unrecognised stressed book that banks are sitting on, around 1.8 per cent is to stressed public sector units, around 2 per cent of it either enjoys some group support and could flow to joint lender forum or would be subject to asset sale, around 2.9 per cent could be the addition to the restructured book from infrastructure projects.

It said the sectors which have the highest unrecognised stressed exposure include infrastructure, power, telecom and real estate among a few other sectors.

"While the iron and steel sector has seen lot of stress recognition in the asset quality review exercise conducted by the Reserve Bank in the last fiscal, provisioning continues to remain inadequate considering higher loss given default estimates," it said.

Ratings said that the impaired assets will peak at 12.5-13 per cent by fiscal 2019.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, May 17 2017. 18:42 IST