New Delhi: India's largest private sector lender ICICI Bank's Managing Director and CEO Chanda Kochhar dismissed concerns over the asset quality of banks, saying that the Indian banking sector is resilient enough to cope with the current macro-economic environment, even as a major credit rating agency warned of stripping India of its investment-grade rating recently.
"The situation is idiosyncratic... In my view, you will not see some huge surprise in non-performing assets or unmanageable issues around quality of assets," Kochhar said in an interview with Morgan Stanley published in different newpapers.
India is well placed to service its loan dues with banks even if projects are delayed, she said, adding that the current situation cannot be compared with 1990s when India suffered a balance of payments crisis.
"This is an exaggerated view around the challenges and the worries... The economy is structurally different, the corporate sector has evolved and the banking sector is structurally different," Kochhar added.
Notably, Finance Minister Pranab Mukherjee and Reserve Bank of India Governor D Subbarao have also rejected comparisons of the current economic situation with the 1990s amid a sharp economic slowdown.
Earlier Monday, rating agency Standard & Poor's cautioned that India could become the first among BRIC nations to lose its investment-grade rating primarily on account of slowing economic growth and political logjam that has held back key fiscal policy reforms, less than two months after the rating agency cut its outlook on India citing similar reasons.
India's gross domestic product (GDP) grew at its slowest pace in nine-years at 5.3% on-year in the March quarter.
Kochhar further said that a rise in lending rates in the past 12-18 months has increased the project costs for domestic companies, but said that "from a 10-year perspective in a growth economy, the debt is serviceable".
In 2011-12, ICICI Bank's gross non performing assets (NPAs) declined to Rs 95.63 billion from Rs 101.14 billion a year earlier. The private sector lender had restructured accounts amounting a net Rs 12 billion in the quarter ended March 31, 2012, thereby taking its total restructured loan portfolio to Rs 42.56 billion.
Gross NPAs of Indian banks' increased to 2.9% of advances as on December 31, 2011 from 2.3% on March 31, 2011, rating agency CRISIL said in a note earlier this year.
Moreover, Indian banks' asset quality will continue to remain under pressure in the current financial year 2012-13 due to high interest rates, slowing economic growth and policy issues, CRISIL added.
ICICI Bank's unconsolidated gross non-performing assets (NPAs), or bad loans, fell to 3.62% of advances as on March 31, 2012 from 4.47% a year ago, while its unconsolidated net NPAs also reduced to 0.73% from 1.11%.
Shares of ICICI Bank Friday ended at Rs 844.9 on the Bombay Stock Exchange, up 3.11% from the previous close.