Rise of NPA in Banks.
It all stared last year with steep fall in crude price from $120 per Barrel to $26 per Barrel now. This steep fall in crude prices has affected the purching power of all oil producing countries. The spiral effect was seen on prices of Steel and Metal. Large number of companies are compelled to sell their produce lower than their cost of production. This has dented profits and most companies reported losses. The viral effect spread to Power sector and Real estate sector as well. As companies started reporting losses, their repayment capacities diminished. hence they started defaults towards repayment.
This has lead to rise in NPA to alarming levels. Now as so many asset shall be available for sale , this will push prices lower . This will hamper recovery.
So Banking may face difficult days ahead.
It all stared last year with steep fall in crude price from $120 per Barrel to $26 per Barrel now. This steep fall in crude prices has affected the purching power of all oil producing countries. The spiral effect was seen on prices of Steel and Metal. Large number of companies are compelled to sell their produce lower than their cost of production. This has dented profits and most companies reported losses. The viral effect spread to Power sector and Real estate sector as well. As companies started reporting losses, their repayment capacities diminished. hence they started defaults towards repayment.
This has lead to rise in NPA to alarming levels. Now as so many asset shall be available for sale , this will push prices lower . This will hamper recovery.
So Banking may face difficult days ahead.
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