NBFCs - Harmonisation, Uniformity Of IRACP Norms - Defers NPA Upgrade, Stress Unwinding: ICICI Securities
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ICICI Securities Report
In this report, we put forth our views and analysis regarding the implication of the Reserve Bank of India’s notification on non banking financial companies/housing finance companies relating to harmonisation and uniformity of income recognition, asset classification and provisions norms across lending institutions.
We believe the notification would likely result in an uptick in gross non performing assets over the next few quarters. Also, by following uniform and conservative treatment for stage-III vis-a-vis GNPA recognition, the disclosed stage-III pool is also expected to rise.
We are revising our stage-III estimates by 20-70 basis points across our coverage universe.
However, given the excess provisioning under the expected credit loss framework, it is unlikely to have a significant impact on credit cost (except a rise for LIC Housing Finance Ltd. and Mahindra and Mahindra Financial Services Ltd.).
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