India’s Bad Loan Pain May Be Easing, Says Crisil’s Krishnan Sitaraman

India's bad loan problem may be easing up due to fewer fresh additions and big-ticket recoveries through the National Company Law Tribunal, according to Crisil's Senior Director Krishnan Sitaraman.

“There will be a reduction in fresh accretion of NPAs as the bulk of the stressed assets in the system have been already recognised,” Sitaraman told BloombergQuint in an interview. “Also, corporate credit quality is expected to be steady due to better economic growth forecast and benign interest rates.”

Crisil forecasts fresh accretion to NPAs to stay at 3.2 percent in 2019-20 compared with 3.7 percent in 2018-19. Sitaraman also said a greater recovery in terms of resolutions at the NCLT will be witnessed in the metal sector.

“It's a cycle. NPA is pegged at 8 percent (of total assets) this fiscal against 9.3 percent in the previous year. This figure was around 11.5 percent in 2017-18. We have hit the peak a year ago. Now we are steadily coming down,” said Sitaraman.

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