Skip to main content

NBFCs may see an uptick in NPAs Icra

By
Non- banking financial companies ( NBFCs) are likely to see an uptick in bad loans as they migrate towards tighter non- performing asset (NPA) recognition norms, said Icra, a credit rating agency.
"The gross NPA percentage of retail focused NBFCs ( excluding captive financiers) have stabilised at 4.3 per cent in December 2015 as compared to 4.1 per cent in June 2015. This however is higher than 3.4 per cent in March 2015 largely on account of migration of NBFCs to tighter NPA recognition norms, as the regulatory minimum NPA recognition moves to 150+ day by March 31, 2016. Based on Icras estimates, gross NPA percentage could increase to 4.2- 4.4 per cent by the end of the year as all NBFCs align their NPA reporting based on the 150 + day norm," said a report by the rating agency.
According to current regulations, for an NBFC, an asset is classified as non- performing when it remains overdue for six months or more for loans and overdue for 12 months or more in case of lease rental and hire- purchase instalments, compared with 90 days for banks. The new norms proposed to reduce the period in a phased manner so that the norms are at par with banks by March 31, 2018. It also added that as a result of moving to tighter norms for reporting of bad loans, even profitability would come under pressure. The report said that in FY17, Icra expects an additional 15- 20 basis- point hit with migration from the 150+ day norm to the 120+ day norm.
Business Standard, New Delhi, 18th March 2016

Comments

Post a Comment

Popular posts from this blog

Data storage norm splits digital payments industry

By
Data storage norm splits digital payments industry  India’s nascent digital payment industry could be thrown into disarray due to the demand by the Reserve Bank of India (RBI) that all user data be stored within the country, fears an industry grouping, which has termed the decision as “heavy-handed”, even as others, including the country’s largest digital payment provider Paytm, have hailed the move.  In a bid to narrow the growing schism, the industry is planning to send a formal representation to the regulator highlighting its concerns, a top official told ET.  “We are trying to build a consensus on the issue," said the person adding that the representation to the central bank will be ready this week.  RBI on April 6, mandated all payment companies—global and local—to set up data storage facilities within India by October. The stringent six-month deadline has attracted the ire of several sections of the industry that fear it will lead to a disruption of wel...
18 comments
Read more

Sebi to finalise options in commodities today

By
The Commodity Derivatives Advisory Committee of the Securities and Exchange Board of India ( Sebi) will meet on Friday with senior officials of the latter, to give a final shape to the rules on options trading in commodity futures, beside revising the warehousing norms to ensure good delivery on settlement. The decision taken, after discussing with the advisory committee, will be placed before the regulator’s board, to finalise the regulations. According to knowledgeable sources, three commodities in each segment, agricultural and non- agricultural, have been proposed for introducing options. It appears commodities from the soya and guar segments are preferred in the former. From the non- agri segment, it is likely that gold, silver and crude oil will be finalised. All these These have better liquidity and both the National Commodity and Derivatives Exchange and the Multi Commodity Exchange, respectively, will be able to introduce the options. In the equity segments, options ar...
17 comments
Read more

E tailers global warehouses may come under tax net

By
E tailers  global warehouses may come under tax net Warehouses of e-commerce companies based in countries such as Australia, Japan, Italy,  Spain, the Netherlands, and Russia may not be exempted from paying the income tax in India  once the multilateral instrument (MLI) to prevent base erosion and profit shifting (BEPS)  comes into force. BEPS refers to the reporting framework mooted by the Organisation for Economic  Co-operation and Development (OECD) and signed by over 100 countries, including India, to  prevent exploiting gaps and mismatches in tax rules to shift profits by multinational  companies (MNCs) artificially to low-tax regimes. The representatives of 68 countries on June 7 this year signed an agreement (MLI) in Paris  to amend their tax treaties to bring them in alignment with measures to prevent BEPS.  However, there is still time for synchronising tax treaties with the multilateral  instrument. India has submitte...
17 comments
Read more