Sashakt scheme will stabilise bank books in medium term, says Fitch

Successful resolution of bad loans currently under the NCLT and govt's plan to infuse an additional $11 bn as capital in FY19 could stabilise balance sheets over the medium term, Fitch said

Fitch Ratings has said that the new ‘Sashakt’ scheme to tackle non-performing loans (NPL) through a market-led approach could stabilise balance sheets in the medium term.

The rating agency, in its analysis of the banking sector in India and Indonesia, said that a further downside risk exists if bad loan problems and thin loss-absorption buffers persist. But there are many initiatives in the works to repair the books of banks, especially public sector banks.

The successful resolution of bad loans currently under the National Company Law Tribunal (NCLT) and the government's plan to infuse an additional $11 billion in FY19 could stabilise