Ending twin balancesheets will take time: Assocham

New Delhi: It may take at least another three quarters before the problem of twin balance sheets of banks and highly leveraged corporate firms gets reasonably resolved, Assocham said on Sunday.

“Our own assessment is that it would take another six to nine months before the banks see revival of confidence to lend afresh as they would then see reasonable amount of their non-performing assets (NPAs) get unlocked. Besides, with sales growth expected to witness a revival, the ability to service debt would improve considerably," said Assocham.

Assocham secretary general D.S. Rawat urged the RBI to relax the norms proposed in its February circular as it is quite harsh both on the bank as also the borrowers. “These norms would aggravate rather than solving the problem of NPAs; at this point of time, both the lenders and borrowers need to be given a confidence and policy support. As long as there is a willingness to resolve the problem, all support must be extended,” said Mr Rawat.

According to the body, within India Inc, there is also a growing realisation that in case the projects are stuck for reasons, there is a legitimate exit route available before the creditors and promoters.   

Earlier this month rating agency Crisil had also said that with both domestic and global demand expected to improve, and transitory impact of demonetisation and GST fading out, it expects credit quality improvement to sustain in fiscal 2019.