Crisil: Lenders might need to raise provisioning to deal with NPAs

Mumbai, June 26 (SURYAA) Lenders might need to raise provisioning to deal with large stressed assets, credit ratings agency Crisil said on Monday.

"Based on Crisil's assessment of embedded value in the top 50 NPA (non performing asset) cases, we estimate a 60 per cent haircut would be needed on these loan assets," said Krishnan Sitaraman, Senior Director, Crisil Ratings.

"That would mean banks will have to increase provisioning by another 25 per cent this fiscal, compared with nine per cent in the last."

Recently, the Reserve Bank of India (RBI) referred 12 large NPAs (non-performing assets) in the banking system for resolution under the Insolvency and Bankruptcy Code, 2016 (IBC). 

"A time-bound resolution of these cases will indeed be a big positive for bank balance sheets," the ratings agency said in a statement.

As per Crisil's study banks had already provisioned 40 per cent for these 12 large NPAs worth Rs 2 lakh crore before the RBI's move.