LENDING & CREDIT | Staff Reporter, Hong Kong

India's bad debt burden is the second worst globally

Trailing only behind Italy, the country has a bad loan ratio of 11.6%.

Bloomberg reports that India’s ballooning bad debt burden is the second worst in the world as the country is in the red with a double-digit bad loan ratio of 11.6%.

Also read: India mulls creation of asset management company to clean banking sector's bad loans

The growing figure is fast approaching that of Italy’s which holds the dubious distinction as the country with the worst bad loan ratio at 14.4%.

Soured loans in Indian banks clocked in at a record $141b (9.5t rupees) as of last year and continues to climb steeply after the central bank withdrew six loan-restructuring schemes and tightened disclosure on stressed assets. The recovery rate for defaulted loans in India is also dismally low at 26% especially in the power sector. 

Also read: Bad loans bog down Indian state banks with $1.4b loss in Q4

Gross non performing assets (NPAs) at Indian banks continue to rise from 8.93% in September 2017 to peaking at 10.14% in March, with the bad debt burden at state banks surging by nearly a fifth from end-December levels brought about by rising slippages from the metals and power sector.

Other countries in the top ten only have low single-digit bad loan ratios with Brazil at 3.6%, France at 3.1%. Both Germany and China have bad loan ratios of 1.7%.

Here’s more from Bloomberg:

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