60% Rise In The Npas Of Nbfcs Seen

Reflecting the perceived overall slowdown in the economy, the non-performing assets (NPAs) of non-banking finance companies (NBFCs) was expected to go up by at least 60 per cent for the last six months.

According to industry estimates, the NPAs as a percentage of total disbursals are put between 2-2.5 per cent for the period between October 1996 and March 1997, as compared with less than two per cent recorded for the previous six months.

Admitting that the non-performing assets were rising considerably, executive director of Association of Leasing and Finance Services Companies (ALFS), Mahesh Thakkar said there had been major defaults on payments by industry due to a slowdown in the economy.

The repayments have come down drastically.

The project costs have gone up and as the primary markets are down, not enough funds are flowing towards capacity expansion, he said.

Due to the mounting NPAs and the increasing cost of raising fresh deposits, the profitability of the industry has come down drastically for the last fiscal.

Asked on the strategies for asset recovery, Thakkar said first the authorities should broaden the recovery system emerging from debt recovery tribunals by including even the NBFCs apart from banks.