RBI gives more leeway to banks on NPAs sales

The Reserve Bank Thursday extended the time-frame to spread over the shortfall arising out of sale of bad assets to securitisation companies/asset reconstruction companies at a price below the net book value, to March 2016.

"As an incentive for early sale of NPAs, banks can spread over any shortfall, if the sale value is lower than the net book value (NBV), over a period of two years. It has been decided to extend this dispensation for assets sold on or after March 31, 2015 and up to March 31, 2016," the Reserve Bank said in a notification.

The earlier facility was up to March 31, 2015. Net book value is the book value less provisions held by banks for the bad assets. The move comes as state-run banks continue to report higher bad loans, including restructured accounts, which rose to 13.2 percent during the year ended March 2015, raising alarm bells for the Reserve Bank.

Gross non-performing assets for PSBs as of March 2015 stood at 5.17 percent while the stressed assets ratio (which include NPAs and restructured loans) stood at 13.2 percent (or over Rs 7,12,000 crore), which is nearly 230 bps more than that for the system, according to RBI data.