Thursday, October 25, 2012

Banks may have to put up with rising NPA levels for another year: Bankers





BL :Oct 21,2012
Banks may have to put up with rising NPA (non-performing asset) levels for another year, as grim economic conditions would continue to affect the profitability of companies across sectors such as power, steel, telecom, mining and textile. 
However, the situation is not yet “alarming” for Indian banks, as they are sufficiently cushioned by capital adequacy. This was the dominant view at a panel discussion organised by the Indian School of Business on the banking sector.
R. Venkatachalam, Deputy Managing Director of State Bank of India, felt the worst is over as far as NPAs are concerned for the Indian banking industry. “There are indications of NPA levels dipping and that we are on a recovery path,” he said.
He was, however, countered by Piyush Agrawal, MD and Country Risk Head of Citibank India, P. Rudran, CEO of Asset Reconstruction Company of India Ltd, and Ehsan Syed, Director, India Ratings and Research, a Fitch Group company.
Piyush made it clear that he was not “as bullish” as Venkatachalam on this, adding that the industry may sea “some real (positive) action” after 12 months. 
Rudran was also emphatic that the worst is not yet over. “See the power sector — all gas-based projects are suffering. The telecom industry has not yet become an NPA, but the time is not far off. Unless the economy shows positive signs of improvement, the NPA levels will not come down,” he said.
The bad assets with Indian banks have doubled in the three years from Rs 68,000 to Rs 1.37 trillion, while restructured assets trebled during the period from Rs 75,000 to Rs 2.18 trillion.

No comments:

Post a Comment