State-run banks turning to consultancies to take help in identifying NPAs


The financial condition of India’s state-run banks hasn’t been too well lately. While on one hand these banks are trying to identify and tackle their stressed loans because of RBI’s clear instructions, the big four consultancies, EY, PwC, Deloitte and KPMG, are introducing products based on algorithm so that bad loans and accounts can be identified.

As per industry sources, many banks would now have to first identify the stressed loans before trying to clean up their balance sheets. As of today, these stressed loans stand at 10 to 12%, and as per the RBI's direction, NPAs have to be identified last by 31 March 2017.

However, since a lot of banks are not able to identify stressed loans, these consultancies are playing their part in creating a business model to help them.

"With the stringent deadline looming it is difficult for them to identify the level of inconsistencies in NPA identification process and also the extent of clean up required at their end to meet the deadline set by RBI, without automated assistance," Vikram Babbar, executive director, fraud investigation & dispute services, EY told ET.

To clear things further, EY has introduced a tool called NPAccurate to assist banks with the NPA.

As per the sources, the number of loans that public sector banks would have can range from 10,000 up to 10,00,000, which could be valued at around Rs 4 lakh crore, subject to be increased.

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