India Ratings said that the bad loan problem for Indian banks is likely to remain for at least a year, driven by considerable stress in the corporate portfolio .
“India Ratings expects corporate credit stress (gross NPA and restructured loan) for FY14 to be at levels comparable to FY13,” the Fitch Group company said.
The rating agency said that the stress level is driven by 22 companies, which are a part of the BSE 500 index.
They owe a total of Rs 1.26-lakh crore to the Indian banking system, India Ratings noted.
Of the 22 companies, two — one each from the construction and infrastructure sectors — account for 42 per cent of the total debt.
The 22 companies may potentially be in distress over the next 12-24 months, it said in its report.
Further, to drive home the point that some part of bank loans is going to remain in the troubled zone, the report states that about 30 per cent of the total industrial loans given by banks are to companies on which the ratings agency has negative or stable-to-negative outlook.