Icra English news | Icra, Latest News & Live Updates in English | English News (Latest English News) at Lokmattimes.com

A further deterioration in asset quality and the risks for banks and non-banking finance compes (NBFCs ) continue to remain high despite most of them reporting a decline in the loans under moratorium phase two (June to August 2020), rating agency ICRA said on Wednesday.This is due to the fact that the last 10 to 15 per cent of borrowers who continue to opt for the moratorium will be more vulnerable to slippages."Although the gradual relaxations in restrictions imposed during the lockdown have helped in improving the collection efficiencies and thereby reduction in residual assets under the moratorium, the pace of recovery seems lower than expected because of localised re-imposition of lockdowns by various states over the last two months."ICRA said the GDP forecast for current fiscal has already been revised to a contraction of 9.5 per cent vis-a-vis an earlier estimate of 5 per cent."A higher share of loans under moratorium for a prolonged period or loans restructured by a lender will reflect incipient stress in the asset quality and will be credit negative for the lenders unless such losses are sufficiently offset by timely capital raise," said l Gupta, Vice President and Sector Head Financial Sector Ratings at ICRA."In our view, as the lenders may continue to have discretion on extending the moratorium, a one-time sector-specific restructuring may also create implementation challenges, given the inter-linkages with various sections of the economy," he said.As per ICRA estimates, the median loans under moratorium will be 25 to 30 per cent compared to broadband of 10 to 50 per cent of total loan books with many of the borrowers being common under phase one and two.In general, the moratorium levels across banks are lower than those of NBFCs with private banks having even relatively lower levels.ICRA said if a one-time restructuring window is made available, more borrowers may opt for it to ease out the near-term uncertainties, conserve liquidity and to smoothen their cash flow as the economy takes the turn for revival.If the Reserve Bank of India was to consider one-time restructuring, it is expected to be extended to certain sectors which will take longer to recover, it said.( With inputs from ANI )

IcraFOLLOW

Icra, Latest News

Investment information agency ICRA has reaffirmed Aster DM Healthcare's ratings on various financial instruments worth Rs 266 crore at A-minus and A2-plus, and assigned them for enhanced limits. ...

Leading credit rating agency ICRA has reported 17 per cent fall in its operating income for the quarter ended June 30 at Rs 42.5 crore as compared to Rs 51.4 crore in the corresponding quarter of the previous year. ...

New Delhi, Aug 27 Ratings agency ICRA expects the overall sales volume for completed and under-construction inventory to ... ...

New Delhi, Aug 24 Post the resumption of toll operations on national highways from April 20, the movement ... ...

New Delhi, Aug 18 Subsidies offered under the Delhi government's recent electric vehicle (EV) Policy 2020 for retail ... ...

New Delhi, Aug 7 The domestic pharma industry is expected to grow at a 4-6 per cent in ... ...

New Delhi, Aug 7 Two-wheeler industry unit sales are now likely to decline between 16 and 18 per ... ...

A further deterioration in asset quality and the risks for banks and non-banking finance companies (NBFCs ) continue to remain high despite most of them reporting a decline in the loans under moratorium phase two (June to August 2020), rating agency ...