TIL Desk/Business/Japan/ State Bank of India, the country’s largest lender, today said most of the nation’s bad loans belong to industries that are still in business and banks will probably recover the write-downs when growth turns up and they perform again. Speaking at a seminar on ‘Asian Banking in Challenging Times’ here, SBI Chairman and Managing Director Arundhati Bhattacharya said the loans which have turned bad are because they are not producing enough money to cover their interest liability.
And the reasons for that have been huge time overruns, leading to cost overruns, which lead to over leveraged positions, she said. About 16.6 per cent of loans to corporates – or about 8.4 per cent of the GDP – had been declared non-performing, according to Credit Suisse.
Banks are straddled with anywhere between Rs 9 lakh crore to Rs 12 lakh crore of stressed assets – made up of bad loans, restructured debt and advances to companies that cannot meet servicing obligations. The government yesterday through an ordinance amended law to give powers to the Reserve Bank of India (RBI) to order banks to initiate insolvency proceedings against defaulters and to create committees to advise them on recovering non- performing loans.
