Loan restructuring has made it difficult to identify weak assets

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Mumbai, Ta. 26 December 2020, Saturday

The non-performing assets (NPAs) of the country's banks are expected to rise sharply in the current financial year due to the impact of the corona on the country's economy and individuals and businesses. Identifying weak assets is currently becoming difficult for banks.

Fifty per cent of the beneficiaries of the moratorium provided by the Reserve Bank due to the epidemic are also believed to have taken advantage of the One Tine Loan Restructuring.

Out of the restructured loans, 5 per cent or Rs 4 to 5 trillion is expected to be converted into non-performing assets. The state of weak assets does not change due to restructuring, said a financial expert.

To provide relief to the borrowers amid the Corona epidemic, the Reserve Bank provided first a moratorium and then a loan restructuring.

Due to these two provisions, the loan repayment capacity of borrowers cannot be estimated at present, which makes it difficult to know the financial health of the banks.

The filing of new cases under the Insolvency and Bankruptcy Code (IBC) has been postponed for a year, making it difficult for banks to identify weak assets.

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