Moneycontrol

Budget 2021

Associate Partners:

  • SMC
  • Samsung
  • Volvo

Moneycontrol

Budget 2021

Associate Partners:

  • SMCSamsungVolvo
Webinar :Join an expert panel for a webinar on Smart investments for a secure retirement January 28, 2021. Register now!
you are here: HomeNewsBusiness

Lenders might be hit by Rs 4,000 crore worth of bad loans sold to ARCs in 2011-12: Report

The provisioning for bad loans could be spread over two-three years, as and when the redemption dates for the SRs come up, the report added.

January 30, 2020 / 06:13 PM IST

Banks are gearing up to set aside nearly Rs 4,000 crore as provisions for bad loans, since most of the security receipts (SRs) in 2011 and 2012 might go unredeemed, Financial Express reports.

The report noted that when asset reconstruction companies (ARCs) purchase assets from banks or financial institutions, they usually pay 15 percent in cash and convert the rest into SRs, which would redeemable after eight years.

Until the SRs are redeemed, they usually lie in treasury books.

The provisioning for bad loans could be spread over two-three years, as and when the redemption dates for the SRs come up, the report added.

Only one or two of the assets mentioned in the SRs have generated returns, and mostly through real estate deals, industry players told the paper.

Close

Moneycontrol could not independently verify the story.

“We are now asking the treasury department to pull out those old SRs and figure out the provisions that will have to be made,” a banker at a state-run bank told Financial Express.

The SRs were so far a part of the treasury books only, but now they will impact the balance sheet, the banker added.

Industry experts told the publication that the changes in the balance sheet will create some pressure on the system.
Moneycontrol News
first published: Jan 30, 2020 06:13 pm

stay updated

Get Daily News on your Browser
Sections