INSUBCONTINENT EXCLUSIVE:
The failure to slash stressed assets is undermining India's efforts to revive economic growthA prolonged shadow-banking crisis and hurdles
in bankruptcy rules are set to keep India atop the world's worst bad-debt pile, even as Italy, which held the title previously, quickens
the clean-up of its lenders.Moody's Investors Service to Credit Suisse Group AG
warned that more loans may sour in the Asian nation's banking system
More than 2.4 per cent of total loans in India's banking system may be under stress on top of the 9.6 per cent bad debt ratio as of June,
the highest among major economies, Credit Suisse estimates shows
Italy, on the other hand, has nearly halved its ratio to 8.5 per cent in the last three years.The failure to slash stressed assets is
undermining India's efforts to revive economic growth that has cooled to a six-year low
A cash crunch in the shadow-banking sector that started with the collapse of IL-FS Group last year and the delays in the bankruptcy process
are adding to the challenges faced by banks as they seek to tidy up their balance sheets."When the economy decelerates like this we will see
non-performing loans go up," said Saurabh Mukherjea, founder of investment advisory firm Marcellus Investment Managers Ltd
"You'll see more bad loans come through as we approach the first anniversary of IL-FS meltdown."Of the nation's 12 largest delinquent
borrowers which Reserve Bank of India asked lenders to push to bankruptcy in 2017, only six have been resolved so far, data compiled by
The delays highlight impediments to the process including conflicting regulations and lack of resolution infrastructure, which is derailing
a 270-day resolution deadline set by the insolvency law.Bolstering the pace of resolutions is crucial for Prime Minister Narendra Modi's
efforts to spur fresh credit and jump-start the $2.7 trillion economy after growth slumped to 5 per cent in the quarter through June
India has announced a slew of measures including merging weak state-run banks with stronger ones in recent weeks to reverse the economic
slowdown and avoid a surge in bad loans.Meanwhile, Italian banks including Banco BPM SpA., Unicredit SpA and Intesa Sanpaolo have cut the
amount of toxic debt on their balance sheets by almost half from a peak of 341 billion euros in 2015, data compiled by
PricewaterhouseCoopers shows."Delays in the bankruptcy process, changes in stressed asset rules and a slowing economy are hindering India's
cleanup efforts," said Mathew Antony, managing partner of Aditya Consulting, an advisory firm that's working with bankrupt companies
"Unlike in Italy, banks in India have been reluctant to sell down bad loans at discounts to tidy up the pile."(Except for the headline, this
story has not been edited by TheIndianSubcontinent staff and is published from a syndicated feed.)Get Breaking news, live coverage, and
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