The current portfolio of Rs. 11.5 lac crore under Stressed Assets may not see much increase, according to CRISIL. This is attributed to the reason that there is considerable recovery in the credit quality of corporates. Reasons attributed are:
- Benefits from Commodity prices
- Lower interest rates and
- Improved capital structures and also
- Efficiency gains.
Thus, creation of fresh NPAs is expected to come down in 2017-18, however, there would be an increase in the overall stock of NPAs, due to slippages would still outpace recoveries. Thus there is expectation tht the Gross NPA would be around 10.5 per cent of the advances as of March 2018 which would be an increase from 9.5 per cent as on March 2017.
Hence, CRISIL feels that quick resolution of the stressed accounts, through Insolvency and Bankruptcy Code (IBC) and other schemes would be more essential, in improving the asset quality of banks.
It may noted that
- Around two thirds of the stressed assets of banks have already been recognized as NPAs as on 31st March 2017.
- Stressed assets include both Gross NPAs and Standard Assets which are presently under pressure, which would move to the NPA category, over the medium period.