Infra financiers’ NPAs up, credit growth to be subdued: Icra

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Infra financiers’ NPAs up, credit growth to be subdued: Icra

Mumbai, Apr 7 (PTI) There has been a spurt in infrastructure financiers’ bad assets in the six months to September 2016 and the book of such companies is expected to be subdued in the near future, a report said today.

The gross non-performing assets of the infrastructure finance companies (IFCs) shot up to 3.4 per cent in September 2016 from 2.8 per cent in March 2016 and 1.6 per cent in September 2015, said the report by ratings agency Icra.

“The reported asset quality indicators of IFCs may not be a true reflection of the underlying stress in the infrastructure portfolio of the entities given that some of the stressed asset may not have slipped to the NPA category yet and are classified as restructured assets,” Icra senior vice president Rohit Inamdar said.

However, despite the thrust given to infrastructure sector, there has been a de-growth in the credit given to the sector and the agency expects expansion in the sector to remain subdued.

“Icra expects IFCs’ growth to remain subdued over the short term,” he said, adding in the medium term, the growth hinges on resolution of structural issues in the sector and private sector participation.

The total infrastructure credit in India, including banks and NBFCs, dropped to Rs 16.5 lakh crore as on September 30, 2016 from Rs 17 trillion as on March 31, 2016, it said.

This was mainly due to a 5 per cent decline in bank credit to the sector on account of the UDAY scheme in the power sector where the exposures get converted into bonds.

Banks account for 58 per cent of the total infra credit followed by state-run infra finance companies at 38 per cent and private sector infra financiers at 4 per cent.

The non-bank infra financiers’ NPAs at 3.4 per cent are lower than the banking system’s overall NPAs of 9.2 per cent, it said. However, the banks’ infra sector NPAs were at a high 13.9 per cent as on March 2016.

The agency said a shift in asset quality recognition, where NBFCs are gradually treated at par with banks’ 90-day due for recognition as NPA, will lead to a spurt in the sector’s bad loans.

This is published unedited from the PTI feed.