Macquarie sees ticking bomb for India as restructured loans fail

Mumbai

INDIA's state-run banks' restructured loans are souring at a record pace, threatening their appetite for new lending with profitability already at a seven-year low.

Reworked assets that turned bad almost doubled to 570 billion rupees (S$12 billion) in the year ended March 31, industry data show. There's another 2.9 trillion rupees in the category, which must be reclassified as delinquent or healthy within two years. Macquarie Group has called this debt a ticking time bomb. Standard & Poor's predicts a record portion will fail in the year ending March 2016 as Fitch Ratings sees lenders' return on equity falling to the least since 2006.