Mumbai, June 25: Estimating Indian banks’ weak assets at around Rs 1,35,500 crore as on March 31, 2002, rating agency Crisil has said “benefits of recent initiatives such as improvement of risk management systems and enactment of the Securitisation Act will only be visible over the long term.”
Crisil estimates the banking sector’s weak assets as on March 31, to be 1.9-2.0 times the reported gross NPAs as on that date and this underscores the need to increase the sector’s capitalisation levels to meet any eventuality arising out of credit losses.
“Given the fact that NPAs in the banking sector could rise due to the high level of weak assets, Crisil feels that the sector’s capitalisation is weaker than what the published figures indicate,” a Crisil release said here, quoting chief rating officer and executive director Roopa Kudva.
The weak assets at the end of 2001-02 include Rs 1,30,000 crore in loans portfolio of scheduled commercial banks and Rs 5,500 crore in their non-statutory liquidity ratio fixed income investment portfolio, it said.
The rating agency said Rs 1,30,000 crore in weak assets represents around 19.1 per cent of banks’ total loans portfolio as on March 31. “This is twice as high as their reported gross non-performing assets of Rs 70,900 crore as on that date,” it added.