MUMBAI (Reuters) – Indian banks may have to provide an additional up to 400 billion rupees ($5.59 billion) towards loans, which could potentially turn sour between October 2018 and September 2020, according to India Ratings & Research, the domestic arm of Fitch Ratings.
Within stressed corporate assets of 13.5 trillion rupees to 14 trillion rupees in Indian banks, about 3.5 trillion rupees are unrecognized by lenders. This highlighted the fact that these loans are still being serviced by borrowers, and categorized as “standard” on banks’ books, said India Ratings & Research, while publishing a report on banking sector outlook.
Worst-case - Scenario - Half - Assets - NPAs
“In worst-case scenario, about half of the unrecognized stressed assets can slip into NPAs (non performing assets) in two years from October 2018,” said Jindal Haria, associate director of banking and financial institutions, India Ratings & Research.
The Indian banking sector has been under massive stress in the last few years as lenders have struggled with about $150 billion of bad loans that have constrained their lending...
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