Friday, February 14, 2014

India iron and steel industry worst affected by slowdown NPA mount - ASSOCHAM



Source – Strategic Research Institute 13 Feb 14

According to the Associated Chamber of Commerce and Industry, iron and steel industry was the worst affected by slowdown in the Indian economy and their repayments to banks have seen huge defaults causing non performing assets of banking sector to swell.

ASSOCHAM said that the number of properties and assets mortgaged to the lenders going for auction has increased substantially but due to slowdown there aren’t many takers for these assets. The number of possession notices published in the media has also gone up significantly, reflecting a tremendous stress in the economy.

According to ASSOCHAM, the worst seems to be over and the situation may improve in the fiscal 2014 to 2015, though the improvement may not be dramatic as long as the consumer confidence is restored and the investment cycle gets back on track.

Iron and steel and infrastructure sectors are the largest contributor to NPAs of the public sector banks. Besides, aviation, textiles and mining are also adding to the stressed assets. These 5 sectors together contribute around 24% of total advances of all banks and account for around 51% of their total stressed advances at the end of September 2013.

The possession and the sale notices are issued by banks and other lenders like financial institutions under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. These notices are for the immovable properties mortgaged with the banks.

Mr DS Rawat Secretary General of ASSOCHAM said that “We will urge the banks to avoid publishing pictures of the borrowers since it does no good either to the banks or to the failed borrowers, a large number of whom would have failed to repay the loans for reasons beyond their control.”

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