Mumbai: Banks have still not recognised about 3.9 percent (Rs 3.5 lakh crore) of the total stressed corporate loans on its books, with close to 40 percent of likely set to slip into non-performing assets by September 2020, a report has warned. As of September, these accounts constitute the total stressed corporate exposure (interest coverage ratio of 1.5x) of 19.3 percent or Rs 13.5-14 lakh crore.

India Ratings report on banking and financial institutions

"Around 3.9 percent of the stressed corporate exposure of 19.3 percent total stressed corporate accounts are still unrecognised and are standard in banks' books, while around Rs 1.5-2 lakh crore of them may slip into NPAs by H2 of FY20," Jindal Haria, associate director for banking and financial institutions at India Ratings, said on Tuesday.

Rs 10 lakh crore stressed corporate loans recognised

Banks have recognised just Rs 10 lakh crore of the Rs 13.5-14 lakh crore stressed corporate loans as of September 2018, Haria said, adding that banks may require Rs 40,000 crore additionally in provisions for these Rs 1.5-2 lakh crore loans, which may become dud assets.

"Around 3.9 percent of the stressed corporate exposure of 19.3 percent total stressed corporate accounts are still unrecognised and are standard in banks' books, while around Rs 1.5-2 lakh crore of them may slip into NPAs by H2 of FY20,"

The agency has maintained a stable outlook on large private sector banks, with only State Bank of India and Bank of Baroda, among the 19, retaining a negative outlook for the remaining state-owned banks till 2019-20.

In 2019-20, all banks on which we have a stable outlook might see moderate write-backs of provisions on corporate assets, depending on the pace of resolutions, the agency said.