NPAs, high debt level to ebb in 6-9 months: Assocham

It may take at least three quarters before the twin balance sheet problem — of banks saddled with bad loans and highly leveraged corporates — gets resolved, industry body Assocham said on Sunday.

It also said the process of resolution of the companies under Insolvency and Bankruptcy Code (IBC) reference would gather pace in the coming months.

Twin balance sheet problem refers to the stress on balance sheets of banks due to non-performing assets (NPAs) or bad loans on the one hand, and heavily indebted corporates on the other. “Our own assessment is that it would take another six to nine months before the banks see revival of confidence to lend afresh as they would then see reasonable amount of their NPAs get unlocked through a resolution.

‘Sales growth expected’

“Besides, with sales growth expected to witness a revival, the ability to service debt would improve considerably,” Assocham said in a statement.

Assocham Secretary General D.S. Rawat urged regulator RBI to relax norms proposed in its February circular on the revised framework for resolution of stressed assets, claiming these were harsh both on the banks as also borrowers.

“These norms would aggravate rather than solve the problem of NPAs,” he said.