Banks’ bad loans may rise to 9.5% by September 2022: RBI – Times of India – India Times English News

MUMBAI: RBI’s semi-annual stress tests indicate that bad loans may worsen over the next 12 months, but will remain in the single digits even in the worst-case scenario. The projected results are the most optimistic since the outbreak of the pandemic and coupled with assurances that banks are adequately capitalized to absorb loan losses and meet prudential guidelines.
The financial stability report released by the RBI on Wednesday projected the gross NPAs of banks to rise from 8.1% of total assets by September 2022 to 6.9% in September 2021 and 9.5% under the severe stress scenario.
There is no forecast for a growth of 1.2-2.6 percentage points in bad loans from current levels. This is a conservative estimate, something like the RBI’s crash test where it assesses the impact of some hypothetical adverse economic conditions. “However, the SCBs will have sufficient capital both at the aggregate and individual level, even under stress conditions,” the report said.
In the foreground of the report, RBI Governor Shaktikanta Das said, “Banks’ balance sheets remain strong and capital and liquidity buffers are being strengthened to cushion future shocks, as outlined in the stress tests presented in this report.” is mentioned.” Is shown.”
All post-pandemic projections show a far worse outcome than the current report. In July 2020 and January 2021, RBI’s NPAs for the baseline scenario were in double digits. In July 2021, the RBI had projected a baseline GNPA of 9.8% and a worst-case scenario of 11.22%.
The latest is the most optimistic projection in the past two years. Even more, noting that analysts expect NPAs to rise as some loan accounts backed by the COVID relief measures turn delinquent after the special exemption ends on March 22. Emerging signs of stress among micro, small and medium enterprises (MSMEs) as well as the microfinance segment calls for closer monitoring of these departments, the report said.
Within bank groups, the GNPA ratio of public sector banks may decline to 10.5% by September 2022 under the baseline scenario of 8.8% in September 2021; The share of bad loans for private banks may increase from 4.6 per cent to 5.2 per cent.