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27
December 2017
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NPA (The Total Investment
& Insurance Solutions)
India’s
non-performing assets (NPAs) are growing rapidly and the country is at fifth
spot in terms of high NPAs across the world, says a research note.
In
the report, CARE Ratings says, “India features very high up the order and is
lower than only Portugal, Italy, Ireland and Greece. Quite clearly, the
Insolvency and Bankruptcy Code (IBC) and National Company Law Tribunal (NCLT)
have its task cut out to lower these numbers and make the system more robust.”
 |
NPA (The Total Investment
& Insurance Solutions)
CARE
Ratings had looked at the levels of NPAs in various countries to view how India
stands in comparison. The study takes information from IMF to maintain comparability
in concepts used in calculating the same. The time period for various countries
is different depending on the availability of data and hence has been
mentioned. The NPA ratios for countries has been categorized under four
headings: very low NPAs which are less than 1%, low level 1-2%, medium 2-5% and
high levels above 5%. The
Total Investment & Insurance Solutions
Here
are highlights from the Report…
·
The four major economic
drivers in the developed world, UK, US, Japan and Germany had NPA ratios less
than 2%.
·
Within the emerging market
economies (EMEs), China, Argentina and Chile had low ratios of between
1-2%.
·
Within the developed
countries, France had a higher NPA ratio of 3.41%.
·
Brazil and South Africa,
which are part of the BRICS Group of nations, had moderately high ratios of
3.69% and 2.83%, respectively.
·
India’s NPA ratio (which
excludes the restructured assets which are around 2% higher than NPA) is one of
the highest in the group.
·
The countries with higher
NPA ratios than India are part of the PIIGS group- Portugal, Greece, Italy,
Ireland.
·
Spain had a lower number at
5.28%.
The
seriousness of the NPA problem can be gauged by the absolute level of impaired
assets in the system. “Ever since the Reserve Bank of India (RBI) had spoken of
asset quality recognition (AQR) in 2015, there was an increase in the pace of
recognizing these assets. It is not clear whether all have been recognised as
yet, though judging from the trends witnessed so far, it does appear that the
cleaning up operation on this score would be completed by March 2018. From
there on, it would be more a case of incremental NPAs being generated on
account of other factors rather than one of recognition by banks,” the report
concluded. The Total Investment & Insurance
Solutions
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