Against coal and gas power assets
IDFC announced that the volume of net restructured assets, Non-Performing Assets (NPAs) and Security Receipts (SRs) as of 30 June 2015 was 8.4% of its loan book. Almost 80% of the risks relate to the coal and gas based assets. Given that IDFC will be transitioning to a bank by the end of Q2 FY16 with no visible solution for these assets, IDFC believes it is prudent for them to make incremental provisions against known risks. While the existing loan provisions will be adequate to take care of the regulatory provisioning requirements even if these assets were to deteriorate and become NPAs, IDFC plans to take additional provisions of approximately Rs. 2500 crore in Q2 FY16 against coal and gas power assets to make sure that in the aggregate, it has provided 50-60% against the aggregate stressed loan assets many of which will not be NPAs on 30 September 2015. IDFC plans to create these additional provisions by utilizing non distributable special reserves that it has created over the past several years, subject to appropriate approvals. The net impact of these additional provisions will be a reduction in net worth by approximately Rs. 1600 crore.Powered by Capital Market - Live News
