Millennium Post

Rs 5.73 trillion: Amount that top 10 groups owe public sector banks, FIs

The Reserve Bank of India collects credit information from banks under the CRILC reporting system for borrowers with the credit exposure greater than Rs 5 crore.

“RBI had informed that gross outstanding credit for top ten corporate groups is Rs 5,73,682 crore as on March 2016,” Minister of State for Finance Santosh Kumar Gangwar said in a written reply to the Rajya Sabha. RBI is prohibited from disclosing credit information except under certain conditions, he added.

The minister was asked whether it was a fact that top 10 corporate houses owe a huge amount of money to the public sector banks and financial institutions. Gangwar further said that government has taken specific measures to address various issues facing sectors such as infrastructure, steel and textiles where incidence of non-performing assets (NPAs) or bad loans is high.

The government has also approved establishment of six new Debt Recovery Tribunals to speed up the recovery of bad loans to the banking sector. “The government has recently issued advisory to banks to take action against guarantors in event of default by borrower ...since in the event of default, the liability of the guarantor is co-extensive with the borrower,” Gangwar said.

In reply to another question, he said public sector banks wrote off (including compromise) Rs 59,547 crore during 2015- 16 while their private sector counterparts wrote off Rs 12,017 crore. Foreign banks too wrote off Rs 1,057 crore.

“RBI has informed that write-off details for leading account holders are not available with them,” the minister added. Meanwhile, government asked the Serious Fraud Investigation Office (SFIO) to probe 184 companies in 2015-16, the highest number for any fiscal in more than a decade. During the 11-year period from 2004-05 to 2015-16, SFIO was ordered to probe 469 companies, Minister of State for Corporate Affairs Arjun Ram Meghwal said in a written reply to the Rajya Sabha.

Out of them, investigations related to 252 companies have been completed and probe involving 206 firms is in progress. “Besides, investigations involving 11 companies have been quashed or stayed or kept in abeyance by courts,” Meghwal said. As per data provided by the Minister, SFIO investigation was ordered against 184 companies in 2015-16 -- the highest for any financial year in the decade starting from 2004-05. 

‘Banks’ asset quality problems, capitalisation stress to continue’
Indian banks will continue to face pressure on their asset quality, profitability and capitalisation over the next 12-24 months, S&P Global Ratings said on Tuesday. The US-based agency expects that non-performing loan ratios of Indian banks with high exposure to companies in troubled sectors will continue to rise. “India’s economic risk trend is negative. Prolonged weakness in the asset quality of Indian banks could lead us to assess that economic risks have increased,” S&P Global Ratings credit analyst Geeta Chugh said. In a report titled “Economic woes cast a shadow on Indian and Chinese banks”, S&P Global Ratings compared banks in these two countries on parameters such as asset quality, profitability, capitalisation and credit growth. Banks in India and China will continue to face pressures on their asset quality, profitability and capitalisation over the next 12-24 months, the report said. “We expect economic risks to remain high for Indian and Chinese banks, which will constrain their credit profiles,” Chugh said. 

“Asset quality for Indian and Chinese banks is likely to remain under pressure due to slow industrial recovery in India and overcapacity in many Chinese industries,” Chugh added. Interest-rate liberalisation and deepening debt capital markets in India could weaken the banking sector’s net interest margin (NIM). “We believe that NIMs will compress for Indian banks with corporate focus and higher bad loans. Banks are also likely to reduce lending rates further, after having cut base lending rates by 70-90 bps in the past few quarters,” S&P Global Ratings credit analyst Amit Pandey said. Continuing high credit costs will also limit any meaningful improvement in profitability, Pandey added. 
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