IFC sees opportunity in cleaning up India's bad loans

World Bank's investment arm, International Finance Corporation (IFC), has been evaluating an investment opportunity thrown open by the soaring bad loans in the country. According to a Mint report, IFC is in touch with various asset reconstruction companies for possible investment opportunities in country's bad-loan market.

IFC, which has already invested in various startups and infrastructure projects in the country, is now keen on playing an active role to help Indian banks clear its NPAs ridden balance sheets.

A partner in a stressed asset platform with Apollo Global Management Llc, International Finance Corporation is now exploring investment opportunities in securities receipts issued by asset reconstruction companies (ARCs). The move could help banks to expedite recoveries from bad loans.

The economic slowdown in the global market has put stress on various banks in the country. Many of them are reeling under huge burden of NPAs. Data released by the Reserve Bank of India showed stressed assets such as gross bad loans, restructured assets and written-off accounts in country's banks rose to 14.5% of total assets as of 31 December, compared with 9.8% in March 2012.

IFC's move could help Indian banks clean up some bad assets from their books before the March 2017 deadline set by RBI.