Gross non-performing assets of banks could almost double to R4 lakh crore at the end of fiscal 2016 from levels of R2.6 lakh crore reported at the end of FY14,Crisil said on Tuesday, reports fe Bureau in Mumbai. Analysts at the credit rating agency also felt the 5/25 scheme may mask the true picture of asset quality and warned that about 15% of these assets could slip into NPA territory over the longer term. They estimate R80,000 crore of assets could be refinanced under the scheme this year.
“We believe that the 5/25 scheme will replace the restructuring tool earlier available to banks especially for large loans. Restructured assets were visible in the reported numbers of banks. But now, the assets that will be part of the 5/25 scheme, they will not be necessarily be reported by banks and could get masked in the NPAs,” they said.
The 5/25 scheme introduced by the Reserve Bank of India almost a year ago provides for flexible structuring of project loans given to the infrastructure sector with power and steel industries under its ambit. The scheme puts forth an option for lenders to finance a project for 25 years, with additional loans disbursed after evaluating the project status every five years.
FE had reported previously that a number of companies have opted for relief under the scheme such as Bhushan Steel, Essar Steel, two subsidiaries of Adani Power and Jaypee Infratech.
“This is a scheme which will definitely benefit banks in curtailing slippages from large project loans where they can go for structuring of projects to a larger tenure. In absence of this, the gross NPAs we believe could have been much higher than the 4.5% that we now expect from the FY16 which is still an increase of around 20 bps,” Crisil noted.
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