Concerns eases on restructured loans of Indian banks: Fitch
Global rating agency Fitch on Tuesday said economic recovery has eased concerns on restructured loans of Indian banks.
New Delhi: Global rating agency Fitch on Tuesday said economic recovery has eased concerns on restructured loans of Indian banks.
"Asset quality concerns stemming from the surge in restructured loans of Indian banks in 2008 and 2009 have eased as economic activity continues to improve," it said in a note.
Non-performing loans (NPLs) from Indian banks` Rs 1.2 lakh crore (about USD 26 billion) restructured loan portfolio are estimated at 15 per cent to 25 per cent now. This could lead to a moderate one percentage point increase in the gross NPL ratio of the Indian banking system, up from 2.4 per cent at end-September 2009, Fitch said.
The agency estimates that these NPLs will peak in the next financial year by when close to 75 per cent of restructured loans are expected to mature, and the resulting increased credit cost could impact return on assets (ROA) on average by a modest 13 basis points.
Four industries - textile, infrastructure, commercial real estate and steel - account for nearly half of the total restructured loans.
>"Since the larger private banks have relatively lower exposure to these industries, the extent of restructuring among private banks (2 per cent of loans) is markedly less than that of government banks (5 per cent)," it said.