Tribune News Service
New Delhi, June 26
The RBI recently referred 12 large non-performing assets (NPAs) in the banking system for resolution under the Insolvency and Bankruptcy Code, 2016 (IBC) and a time-bound resolution of these cases will indeed be a big positive for bank balance sheets, says a Crisil Research report.
Crisil’s study shows that banks have already provisioned around 40% for these NPAs worth Rs 2 lakh crore, or equal to a quarter of the NPAs in the banking system, before the RBI’s move.
The report said with this step, the RBI has addressed the reluctance of banks to further mark down the asset values of these non-performing assets (NPAs) by having an oversight committee to provide guidance. Additionally, it sends a strong signal to borrowers to adhere to credit discipline, and also encourages banks to break resolution deadlocks with definite timelines.
Rama Patel, Director, Crisil Ratings, said: “While the IBC route could entail a substantial markdown of loan assets by banks, the ability, especially of public sector banks, to absorb such losses and the consequent impact on their capital position will need to be monitored closely in the road ahead”.