How $30 bn hit looms for banks if new accounting rule kicks in on April 1

If advances grow more than 7 per cent or 8 per cent, banks may need $14 billion toward additional provisioning even after the recapitalization IndAS estimates

India’s lenders, already struggling with $210 billion of stressed assets, may have to prepare for another hit as early as the coming financial year if new accounting norms kick in as planned on April 1.

The IndAS -- based on the IFRS9 standards created in the aftermath of the financial crisis - would require banks to make provisions for expected bad loans instead of the current system where they only cover actual losses incurred. CLSA estimates that would almost double stressed advances, boost provisioning by $30 billion and consume more than $26 billion in capital at state-run banks and $4 billion