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Journalism of Courage
Banks will have to file for insolvency proceedings against 70 stressed assets worth nearly Rs 3.8 lakh crore in the next 15 days with the Reserve Bank of India’s deadline coming to an end on Monday and the Allahabad High Court refusing to provide any interim relief to power companies.
This is likely to push up their provisioning requirements, although the additional amount is likely to be spread over the September, December and March quarters. The future course of action will also depend on any order passed by the Supreme Court. Of these 70 assets, about 35 are power sector assets, with a total bank exposure of about Rs 1.74 lakh crore. “The amount of additional provision that the banks will have to make will depend on the assets, and for how long they have been classified as non-performing. Also, the provisioning does not have to be upfront,” a senior banker with a public sector lender said.
Krishnan Sitaraman, senior director at CRISIL Ratings, said the provisioning requirements will continue to be high in the current fiscal, resulting in a number of banks likely to report losses. However, a material increase in the NPA ratio is unlikely as most of these loans have been recognised as NPAs, Sitaraman added. A senior banker said 16 power assets under RBI’s February 12 circular have already gone to NCLT and they may be admitted over the next few weeks. SBI chairman Rajnish Kumar on Monday told a business news channel, “There is a lot of hype regarding the August 27 deadline. Sometimes I wonder if it is warranted. There is no impact whatsoever, be it NPA or provisioning. The reference to NCLT has already been happening. Nobody was waiting for August 27 to come.” —FE
