Gross NPAs of banks may jump to 11.5% by end of FY21: Care Rating

Topics Gross NPAs | CARE Ratings | Banks

Representative Image

The gross non-performing assets (NPAs) ratio of Indian banks is likely to be 11 to 11.5 per cent by end of current fiscal and they are likely to restructure 4 to 5 per cent of the overall bank credit outstanding, according to Care Rating.

Besides, the asset quality data post the COVID-19 lockdown is uncertain due to a developing regulatory scenario. Multiple stakeholder objectives and moratorium computation with various firms have varying ways of computing moratorium, said the rating agency.

The disruptions caused by coronavirus pandemic have further deteriorated the health of banking industry which was already reeling under severe stress for several years.

The GNPA ratio of scheduled commercial banks stood at 8.2 per cent in Q1 FY21 against 9.5 per cent in the same period of last year.

Care said the end of FY21 GNPA numbers will move significantly ahead from the 8.5 per cent level witnessed at the end of FY20 be moderated by the one-time restructuring scheme and ongoing write-offs.

The additions to GNPAs will primarily from loans under SMA-1 (special mention category) and SMA-2 categories which were under moratorium and not eligible for restructuring.

Also, banks may see stress coming from the lower-rated or stressed corporates as personal loans not eligible for the restructuring scheme and banking exposure to unsecured personal loans, said Care.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel