Lenders need to make more arrangements NPA

Mumbai: Banks transfer new non-performing goods (NPA) to the National Asset Reconstruction Company (NARCL). However, the provision requirement is poised to increase as the sale value is likely to be lower than the value of the loans on their books. Meanwhile, banks may not realize the proceeds from the sale of the first batch of dangerous loans, worth Rs 50,000 crore, in the first half of the financial year. This is because the sale deadline has been pushed back to September 2022.
The “dangerous financial institution” NARCL was proposed as part of the Funds in 2001. Banks were to determine the dangerous loans of Rs 2-lakh-crore, which would have been offered to NARCL for 15% cash and 85% security receipts guaranteed by the authorities. The federal government had agreed to provide a guarantee of up to Rs 30,600 crore to the security receipts, which made them equivalent to a cash sale. The move from Dangerous Loans to NARCL was intended to launch capital, which could help fund growth.

In the first section, fully provisioned property of around Rs 90,000 crore is expected to be transferred to NARCL, while banks would transfer the remaining property with reduced provisions in section 2. Banks started with Rs 50,000 crore of recognized property. To accommodate the change, many lenders accelerated mortgage provisions to offer a value closer to sale value. The RBI may also be eager for banks to handle all assets under pressure at the start of its interest rate tightening cycle. Now, even because the master batch change is pending, the Indian Bank Affiliation participates with lenders for a whole new set of huge loans.
The additional provision requirement came at a time when banks had to build giant provisions in the direction of depreciation in the value of presidential securities following rising interest rates (their costs go down as charges increase since they are transferred in the opposite direction). instructions).
With only six weeks left until the end of the second quarter, there is a risk that the sell-off will only occur in the second half of the monetary year. Banks said the change is taking time as they all have to agree on the valuation at which loans should be transferred and a number of smaller lenders have not made full provisions. Involve all banks in the sale of goods to BOW is a key requirement because without the settlement of 75% of the collectors, there can be no restructuring of the mortgage.

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