Bank loan stress: 50 corporate loan accounts under close govt watch, says report
The bank loans under scanner include those that have become NPAs and also those restructured as of December 2016
The government is taking a close look at stressed assets worth Rs 5 lakh crore of various corporates, as it steps up its efforts to resolve a heightening crisis in the country's banking sector.
According to a report in The Economic Times, the government, the Reserve Bank of India and even probe agencies are scanning about 50 stressed assets, which have been put on a watch list.
The list of the corporates under watch include Videocon Industries; Jindal Group firms such as Jindal Steel and Power Ltd; Punj Lloyd; Jaypee Group; Lanco, including Lanco Infratech; Monnet Ispat; Essar Ltd; and Bhushan Steel, said the report.
The loans under scanner include those that have become NPAs and also those restructured as of December 2016, the report said.
The banking sector in the country is reeling under the burden of croporates NPAs. As of December 2016, bad loans at 26 public sector banks stood at Rs 6.46 lakh crore. The crisis has snowballed under the Narendra Modi government from just Rs 2.34 lakh crore in June 2014.
However, NPAs are just a part of the problem. According to former RBI deputy governor KC Chakrabarty says the total stressed assets in the sector will be Rs 20 lakh crore.
"I’ll put the figure around Rs 20 lakh crore... One should include all troubled loans including reported bad loans, restructured assets, written off loans and bad loans that are not yet recognised," he told Firstpost's Dinesh Unnikrishnan in an exclusive interview.
The Modi government has recently stepped up its efforts to address the problem. As part of this, the government has amended the The Banking Regulation Act through a ordinance, giving more teeth to the RBI to deal with NPAs.
The ordinance, promulgated on 5 May, authorises the RBI to issue directions to banks to initiate insolvency resolution process in case of loan default. It also empowered the central bank to issue directions with regard to stressed assets.
The RBI has been equipped with powers to specify one or more authorities to advise banks for dealing with the problem of non-performing assets (NPAs) which have reached "unacceptably high levels".
Though this has been touted as a big boost to the government's efforts to tackle the problem, there is also a view that the RBI - the banking sector regulator, is getting more powers to take decisions and that amounts to conflict of interest.
Finance Ministry expects banks to write back more than Rs 1 lakh crore after resolution of all 12 NPAs referred to insolvency proceedings by the RBI
These 12 large accounts had become NPAs by end-March 2016 and Crisil estimates show the banks had already provisioned 40 percent for these NPAs worth Rs 2 trillion or about Rs 80,000 crore.
The Inter-Ministerial Group (IMG) on coal blocks today reviewed the progress of 14 mines allotted to firms like Jaiprakash Associates, Monnet Ispat & Energy and Jindal Steel and Power Ltd (JSPL).