Finance Ministry asks banks to give details of exposure to stressed sectors

New Delhi: The finance ministry has asked state-run banks to give details of their exposure to aviation, telecom, commercial real estate and power companies in a move to arrest possible rise in bad loans.
A spike in bad loans will require banks to set aside capital to cover potential losses, which in turn will curb their credit growth and increase capital needs that the government could find difficult to meet. "There are reports of stress in these sectors. We want to evaluate if we need to take some pre-emptive action to support banks in making such accounts standard," a finance ministry official said.
As on November 30, state-run banks have requested for restructuring 344 loan accounts with an outstanding of Rs 1.65 lakh crore. Gross NPAs crossed Rs 25,000 crore in the first six months of the current fiscal. State-run banks had to write offRs 17,300 crore last fiscal, againstRs 11,000 crore in the year before.
"The government may want to know what is the state in these sensitive sectors, where potential issues of downturn may arise," said KPMG Executive Director Ravi Trivedi. But the government is not taking any chances after high provisions eroded SBI's tier-I capital to below 8%. The ministry and RBI are already in talks with Air India and textiles ministry on loan recast. Almost all airlines are suffering losses.
17/12/11 Dheeraj Tiwari/Economic Times

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Categories: Indian Aviation- In General Dec 2011