Stressed loans now see decrease in their volume

Stressed loans now see decrease in their volume

Mumbai: Banks are now seeing the results of tighter norms and Bankruptcy code to control the bad debts.

As per the news reported in Hindustan Times, according to the unpublished data reviewed by Reuters, at the end of September, it is observed that Stressed loans eased 0.4 percent from three months earlier to Rs 9.46 trillion ($148.3 billion).

Stressed loans include both the non-performing as well as restructured or rolled-over loans.

AS of July-end last year, bad loans constituted 12.6 % of the total loans and they soured to a record high of 9.5 trillion rupees.

But, now they reduced to Rs 9.46 trillion i.e. 12.2 % as of end September.

Jobin Jacob, an associate director at Fitch Ratings, said that “The view is that the stressed assets ratio will not go up sharply from current levels. We expect asset-quality parameters to stabilise in due course before moving lower.”

He further added that “The capital that has come in is a big positive and will bolster state banks’ ability to absorb losses that are likely to ensue from non-performing loan resolution.”

State-run banks have stressed loans of 16.2 percent of their total loans, whereas the private banks have 4.65 percent of their total loans classified as stressed amounting to 1.06 trillion rupees as of Sept. 30.