Moody’s Investor Service on Friday said that the resolution of Bhushan Steel, which was referred to the National Company Law Tribunal last year, would be beneficial to Indian banks.
“We expect most rated Indian banks to have some exposure to Bhushan Steel and the resolution will particularly benefit State Bank of India, the leader of the consortium of lenders to Bhushan Steel,” Moody’s said. Bhushan Steel is one of 12 large non-performing assets (NPAs) held by the banks. Within this 40%, the steel sector constitutes the largest industry, with a share of about 35% of these NPAs. Within the steel sector’s NPAs, Bhushan Steel is the largest account representing about 40% share.
Asset quality metrics
“Meaningful resolutions of non-performing assets would significantly improve banks’ asset quality metrics. Beyond asset quality, the effect on profitability and capital will depend on the haircuts that lenders take in the resolution process,” Moody’s said.
