A study jointly conducted by rating agency Crisil and ASSOCHAM said the gross non-performing assets (NPA) in Indian banks would touch Rs 9.5 lakh crore mark by March 2018. In March 2017, this figure was Rs 8 lakh crore. ASSOCHAM, which brought out a statement on the study, titled ‘ARCs headed for structural shift’, said the high level of stressed assets in the banking system provides enormous opportunity size for asset reconstruction companies, which are an important stakeholder in the NPA resolution process. It, however, said that owing to capital constraints, growth of ARCs is expected to come down significantly. The study added that with banks expected to make higher provisioning over and above the provisions made for stressed assets, they may sell the assets at lower discounts, thus increasing the capital requirement. The study said 2018 would see a structural shift in the stressed assets’ space as increased stringency in banks’ provisioning norms for investments in security receipts (SRs) is likely to result in more cash purchases.
