Tamil Nadu, UP, Gujarat have highest NPAs in India: study news

domain-b:23 February 2012

Tamil Nadu, Uttar Pradesh, Gujarat and Andhra Pradesh accounted for the highest value of non-performing asset (NPA) properties in 2011-12 according to a new study.

The study, conducted by NPAsource.com,  reveals that out of 6,359 units valued at Rs9,897 crore across India in 10 months of 2011-12 financial year, Tamil Nadu has the largest amount of NPA properties valued at Rs1,261 crore spread across 663 units.

Uttar Pradesh was second with 533 units with a value of Rs1,025 crore, followed by Gujarat with 349 properties worth Rs1,023 crore and Andhra Pradesh (AP) with 1,226 units valued at Rs1,004 crore.

According to Devendra Jain, chairman and managing director, of metals sector consulting firm Atishya Group, ''While Mumbai is known to be the biggest centre for disbursement of loans to corporates, our study has found that Tamil Nadu and Uttar Pradesh have the largest amount of NPA properties by value in the first 10 months of 2011-12. Maharashtra comes at number five in terms of NPA properties by value."

Total NPAs in India as of 31 March 31 2011, exceed Rs 90,000 crore according to Reserve Bank of India statistics, excluding those with co-operative banks, state finance bodies, financial institutions  and non-banking finance companies.


The distribution of NPAs in the system follows the 80:20 rule whereby 20 per cent of borrowers account for 80 per cent of the value of impaired assets. 



The study also revealed that out of the different types of properties given as collateral against loans, commercial and industrial properties worth Rs5,0633 crore spread across 2,925 units accounted for more than 50 per ent of the total NPA properties. Land worth Rs2,793 crore spread across 1,146 land and 2,165 residential units valued at Rs838 crore were the other major categories in NPA properties


The large impaired assets comprise industrial assets having good restructuring potential. ''Our experience shows in value terms that more than 60 per ent of the impaired assets are capable of being restructured or sold as going concerns. 


 The small assets, however, have to be put through a recovery process, where the collateral based funding practice followed by the banking system offers a fair recovery potential,''  Jain, added.


He said the website aims at bridging the gap between the buyers and the sellers of non-performing assets.
"It is designed to facilitate the best deals for disposal of NPAs by updating all the details of available assets in the Indian market,'' Jain says. "We plan to tie up with foreign investors globally who would be interested in acquiring impaired assets in India."
   
Interestingly, globally the figure for impaired assets would run into trillions of dollars, with multiple pitfalls impacting the monetisation of such impaired assets. 


More over, database are scattered and inadequate, nor have they been updated periodically,  leading to inadequate realisation from intrinsic worth of NPAs, lack of visibility and transparency for all stakeholders as well as no access facility of data on NPA for use by prospective investors or buyers.