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Indian steel industry gross NPAs at mammoth INR 1.15 trillion-The 18th China(Guangzhou)Int'l Stainless Steel Industry Exhibition
11/22/2016 - Stainless Steel Exhibition |
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Press Trust Of India reported that gross non performing assets in the domestic steel sector, which accounts for 2% of India¡¯s GDP, are around INR 1.15 lakh crore.
Parliament was informed that a non performing asset is defined as a credit facility in respect of which the interest and/or installment of principal has remained ¡®past due¡¯ for a specified period of time.
In simple terms, an asset is tagged as non performing when it ceases to generate income for the lender. Non-performing assets are problematic for financial institutions since they depend on interest payments for income. Troublesome pressure from the economy can lead to a sharp increase in non-performing loans and often results in massive write-downs.
Total loan exposure to India¡¯s over USD 100-billion steel industry, the world¡¯s third largest, is about INR 3.13 lakh crore.
Minister of State for Steel Vishnu Deo Sai said in a written reply to the Rajya Sabha said that ¡°The total exposure of steel industry is about Rs 3.13 lakh crore out of which Gross NPA is about Rs 1.15 lakh crore. This works out to 36.94 per cent of the total loan outstanding as on March, 2016.¡±
He added that at the instance of government, the Reserve Bank (RBI) recently reduced overall policy rates that are expected to get translated into reduction in actual lending rates.
The minister added that the RBI accorded a flexible refinancing repayment option, popularly known as 5:25 scheme for long-term infrastructure projects, including steel where total exposure of the bank is above INR 500 crore.
The central bank has also brought in Strategic Debt Restructuring (SDR) scheme to help debt ridden companies including steel companies.
Mr Sai said that further, in June 2016, RBI brought in another scheme called Scheme for Sustainable Structuring of Stressed Assets, also known as S4A scheme, with the same objective.
Government has taken a slew of measures to give a boost to domestic steel players. He said that ¡°They include imposition of antidumping and safeguard duties on a range of steel products with objective of eliminating/reducing low priced unfairly treaded steel from countries such as China which negatively impacted profitability of the domestic steel producers and simultaneous loss of market share.¡±
Mr Sai noted that the government has initiated simultaneously wide ranging investment plans in infrastructure which is expected to increase the demand for steel.
-The 18th China(Guangzhou)Int''l Stainless Steel Industry Exhibition
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