An additional 4% of outstanding corporate borrowings from banks, translating roughly into Rs 2.54 lakh crore could tip into default over the next three years if the pace of economic expansion doesn’t pick up sufficiently. A study of top 500 private sector companies by India Ratings & Research showed that about Rs 10.5 lakh crore of their debt could turn vulnerable, which means borrowers could face difficulty in servicing these loans. These 500 debt-heavy borrowers have an outstanding loan book of Rs 39.28 lakh crore. Out of this, the existing default amounts to Rs 7.35 lakh crore loans. The size of system level corporate loan book stands at around Rs 64 lakh crore. The predictions are based on the assumptions of 6% average real GDP growth in FY21 and FY22, with input cost not rising more than 4% and rupee not depreciating by more than 5%. Even if the average GDP growth rises to 7% over the same period, the incremental slippages could still be around Rs 1.98 lakh crore over the next three years, the analyst said.

(Economic Times)