On an aggregated basis, gross NPAs and restructured assets at banks and NBFCs increased from Rs 8.6 million in March 2020 to Rs 13.2 million in June 2021 due to an addition of Rs 3.7 million in loans due in the last 90 days and Rs 2.4 million lakh crore of restructured assets after adjusting for recoveries and write-offs during the period.
“In our view, it would not be out of place to claim that the entire increase in the stressed asset pool is on the March 20 asset base and that the stress contribution of incremental lending would be rather limited in FY21,” said Nomura analyst Nilanjan Karfa. said Amit Nanavati and Tanuj Kyal in a note.
Separating the stress between banks and NBFCs, the total stress increased to 13.3% in June 2021, up from 8.9% in March 2020 for banks, while it rose to 6.7% in June 2021, up from 3.1% in March 2020 for NBFCs has increased, including loans through the federally sponsored Emergency Credit Line Guarantee Scheme (ECLGS).
Nomura estimates that Enders created an additional charge of approximately 2.5 million rupees against the ECLGS program, of which 1.7 million rupees have been declared so far. It is expected that the banking sector’s ECLGS exposure could be five times the total funds disbursed as the program cap has already been raised three times.
Banks estimate that IDBI Bank, controlled by Life Insurance Corp of India (LIC), has the largest holdings of stressed loans at 36.7% in June 2021, followed by Central Bank of India’s 27.2%. HDFC Bank in the private sector has the lowest stressed pool at 6%, just below Axis Bank, which has 6.8% of its loans under stress, including restructured loans. Yes Bank and Bandhan Bank are the two private banks with a stressed loan portfolio of 20% or more.
As with previous rounds of restructuring, state banks have restructured a higher percentage of the loans in all programs of the One-Time COVID Restructuring Program 1 (OTR # 1), OTR # 2, Corporate Debt Restructuring Program (CDR) and RBI MSME Restructuring Program.
“Between March 20 and June 21, the share of state-owned banks in the gradual restructuring across all programs is 78% and the remainder is held by private sector banks. So is the share of state-owned banks within OTR # 1, where the plan is fully implemented are 72%, under implementation OTR # 1 and OTR # 2 81% and in the MSME program 83%, “said Nomura.