A warning has been generated by reputed rating agency CRISIL that a decline in the asset quality of banks is foreseen in line with the assumed rise in gross NPAs of banks from 2.3% in 2008-09 to 3.6% in 2010-11.

"More restructured assets are likely to turn non-performing in the near term," the latest research report by CRISIL quoted.

After the economic meltdown, the RBI had allowed banks to restructure some of their standard assets as a measure to help out small entities to face the crisis. March 2009 reports showed the restructured assets of banks standing at Rs. 76,500 crore.

It has been estimated that the percentage of restructured assets out of the total advances has increased from 2.5% in 2008-09 to 3.4% in 2009-10.

CRISIL warns that some of these restructured assets are very likely to get converted to non performing assets, thereby increasing the total NPA level of banks in the near future. "The rise will be a result of normal additions to gross NPAs from the existing portfolio in addition to deterioration in the quality of some restructured assets," the report said.

Uco Bank CMD, S.K. Goel said that the bank has added fresh NPA worth Rs.1,109 crore in the year 2009-10. "The fresh slippages were largely on account of restructured accounts," he said.

Despite heightened provisioning measures CRISIL expects the NPAs to rise by 30 basis points in the two year period from 2008-09 to 2010-11.