Water crisis in India could further worsen bank NPA problem in power and agriculture sector: World Wildlife Fund report

New Delhi: Water problems could push the non-performing assets of banks higher as many lenders have loan exposure in sectors where there are risks to water resources, says a report. At a time when the banking sector is grappling with mounting NPAs, the World Wildlife Fund (WWF) report released on Wednesday said water risks could pose further “liquidity constraints” on the strained balance sheets of banks. [caption id=“attachment_4351523” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] Launched with the Indian Banks’ Association (IBA), the WWF-India report ‘Hidden Risks and Untapped Opportunities: Water and the Indian Banking Sector’ provides evidence for why water presents a material risk for banks in India, particularly how water risks could lead to stranded assets in the power and agriculture sectors, two sectors that account for the highest gross credit exposure of Indian banks. According to the report, close to 40 percent of the gross credit exposure of Indian banks is in sectors where water risks are significant. “Reeling under a crisis of non-performing loans with close to 10 percent of gross-advances of the Indian banks facing a risk of non-payment from debtors, these risks can place further liquidity constraints on the already stressed balance sheets of banks in India,” it said. Citing NITI Aayog’s observation, it said, the current water crisis in the country is its worst ever. “With water being a shared resource, what the country requires is a comprehensive and sustainable water management plan by various stakeholders,” the report said. While banks are exposed to the risks of water as lenders to businesses, it also places them in a unique position to influence businesses to proactively handle various water-related risks, including using WWF’s Water Risk Filter and enabling the flow of capital towards solutions which address such risks, the report added.     To keep watching India’s No. 1 English Business News Channel – CNBC-TV18, call your Cable or DTH Operator and ask for the Colors Family Pack (inclusive of 24 channels), available for Rs. 35/- per month, or subscribe to the channel for Rs. 4/- per day. To keep watching the Leader in Global Market & Business News – CNBC-TV18 Prime HD, call your Cable or DTH Operator and ask for the Colors Family HD Pack (inclusive of 25 channels), available for Rs. 50/- per month, or subscribe to the channel for Rs. 1/- per day.