Clearly, a sizeable part of the NPL stock is no longer a risk to bank balance sheets. Provisions, made under applicable accounting standards, amount to about 46% of the stock of NPLs. The remaining value of NPLs is supported by expected future recoveries.
Fourthly, there is a fiscal burden in case there are systemic problems, especially in the banking sector, irrespective of whether banking is in the public or private sector. The health of the banking sector is critical for many reasons, one of them being stability in the external sector.