Banking system of India is adversely affected by the problem of stressed assets. NPA ration i.e. gross non-performing assets are at apex right now and yet no signs have been observed for making it null. Right now the correct question would be how big and serious the problem is and what does it takes for banks to eradicate it completely from balance sheet. If estimated through the figure, around Rs.12 lakh crore non performing assets are present at the time being in the bank of all over the country. Outstanding loan books of banks nearly have 15% NPA recorded. Some of the loan had already been sold out to asset reconstruction companies (arcs) of near about Rs.2 lakh crore. Still Rs.10 lakh core is in the system. If the history of Indian banking system is scrutinize, Rs.10lakh crore’s 35% i.e. 3.5 lakh crore will be kept under the head provision and write-off. This big figure mirrors the big problem which needs special attention and thorough discussion and fast effective decision.

The government and RBI came together to solve this big dilemma in a planned manner. Both figured out that this problem could not be shoot with one resolution either could make situations more disastrous for banks. In the past years, many steps have been confronted to make the balance sheet clean of all stressed assets. One of the measures is asset quality review which was initiated in 2015. This step was taken by RBI to evaluate the risk attached with particular assets. AQR led to NPA’S classification and recognition in a more transparent way. Provisioning by banks and its profitability was also getting affected but it showed the real problem to be faced by the Indian banks. In the midst of these storms good news is Rs. 2 lakh crore was already provisioned by the banks.

The government and RBI came together to solve this big dilemma in a planned manner. Both figured out that this problem could not be shoot with one resolution either could make situations more disastrous for banks. In the past years, many steps have been confronted to make the balance sheet clean of all stressed assets. One of the measures is asset quality review which was initiated in 2015. This step was taken by RBI to evaluate the risk attached with particular assets. AQR led to NPA’S classification and recognition in a more transparent way. Provisioning by banks and its profitability was also getting affected but it showed the real problem to be faced by the Indian banks. In the midst of these storms good news is Rs. 2 lakh crore was already provisioned by the banks.

Near about Rs.35000-40000 crore is being provided by banks at the moment. 3-5 years of time is taken by provisioning and real value to be at level. It is assumed that in 4-5 quarters provisioning should be completed. After this it’s an opportunity time for banks to enter into restricting mode. NCLT i.e. NATIONAL COMPANIES’ LAW TRIBUNAL is being referred to the companies by RBI to put the subject NPA to its end. It’s been expected that till june2018 most of the restricting process will be done. Further plans after completion of restructure, debts will be written off to the standard level. After that additional capital will be provided by investors. By the end of 2019 expectation is abstract the problem.

 

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