After the Reserve Bank of India has dumped the reforming schemes and announced the bankruptcy courts as the final settlement of a company’s future, about more than 2 Lakh Crore worth of stressed loans are heading towards the bankruptcy court. Most of these loans belong to the infrastructure sectors including roads, telecom, power and ports and are under the plans such as strategic debt restructuring and sustainable structuring of stressed assets. All the top sector public banks were already burdened with all the non-performing assets over the last five years and are now seeing themselves being pushed towards the wall. If there is no success in solving the restructured loans, this can then lead to a jump in the supplies thereby removing profitability and exhausting the low level of the capital which already exists. As a result, they will be forced to go the government.
According to the estimates, the top 50 accounts account for more than 50 percent of the NPAs which are provided at 45 percent and could rise to 60 percent in the next fiscal year. These NPAs are expected to rise continuously and attain its highest peak in March 2019. Over the last few years, stressed assets have collected with the top four state-run banks making up for Rs. 1.37 Lakh Crore of assets. At present, Bank of India is at Rs. 10,633 Crore, Bank of Baroda is at Rs. 9,021 Crore, State Bank of India is at Rs. 50,482 Crore and Punjab National Bank is at Rs. 67,129 Crore.
There were 600 cases in the CDR out of which 200 did not make it. 90 cases out of the lot were successfully dealt with years ago. 140 cases worth Rs. 1.25 Lakh Crore failed. Banks now have around 180 days to come up with a solution to this issue, restructure the loans and sell the assets in order to open a new opportunity.