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Banks are likely to see some improvement on bad loans once stalled projects that are being cleared by the Cabinet Committee on Investment start picking up, a top Finance Ministry official said.
"The Cabinet Committee on Investment, in the last three to six months, has cleared around 60-70 projects which were stalled for long time and when these projects start moving, I am sure a slight movement would be generated," Financial Services Secretary Rajiv Takru told reporters at an event today.
The official said he expects the improvement to occur in the next financial year.
Takru said although there are some banks where old non-performing assets (NPAs) are showing their true colours, there are a few banks where forward movement is seen.
The CCI, which was formed in January last year, approved most of the stalled projects after Oil Minister M Veerappa Moily was given additional charge of the Ministry of Environment and Forests.
In its half-yearly Financial Stability Report released last month, the RBI had estimated that gross non-performing assets in the system would rise to 4.6% by September 2014 from 4.2% in September 2013, or to about Rs 2.29 trillion from Rs 1.67 trillion a year earlier.
The RBI, however, expects some positives in the second half of the next financial year and estimates gross NPAs at 4.4% by March 2015.
