INSUBCONTINENT EXCLUSIVE:
Reserve Bank of India tries to imagine such a dire scenario for March 2019 that its simulation exercise for bad loans throws up a figure of
With state-run financial institutions disclosing an aggregate nonperforming asset ratio of 15.6 percent in March, a 0.7 percentage point
could end up misleading investors
The asset-quality problem is very likely heading for the 20 percent mark.
Just look at the last three years of data.
In June 2015, 2016 and
2017, the baseline estimates of distress RBI gave in its stress tests were on average 3 percentage points lower than the actual NPAs of
government-controlled lenders nine months later
baseline NPA projection of 16.3 percent
as many as 10 out of 21 taxpayer-funded lenders could risk falling short of minimum regulatory capital, the RBI says
buyers of stranded corporate assets will remain stuck in court proceedings
Meanwhile, the RBI has taken away the various restructuring options banks used as fig leaves to keep classifying dud loans as standard
Investors hardly need to summon up visions of an economic dystopia to arrive at that conclusion.
