Banks gross NPA may rise to 13.5 pc by Sep 2021

 Bank non performing assets (NPAs) may rise to as high as 14.8% in one year in case of a severe stress scenario, from 7.5% as of September 2020, even as Indian banks are still working out a restructuring package for borrowers hit by the Covid 19 pandemic, the Reserve Bank of India (RBI) said in its bi annual financial stability report (FSR).

The RBI's stress tests covers the first six months of the current fiscal ended March and projects a baseline scenario of gross NPAs (GNPAs) at 13.5 ..

If the macroeconomic environment worsens into a severe stress scenario, the ratio may escalate to 14.8%. Among the bank groups, public sector banks’ GNPA ratio of 9.7% in September 2020 may increase to 16.2 per cent by September 2021 under the baseline scenario while those of private sector banks and foreign banks may increase from 4.6% and 2.5% in September 2020 to 7.9% and 5.4% respectively, over the same period," RBI said.

Public sector banks will be most impacted in case of a severe stress scenario with their GNPA ratio rising to 17.6% compared to 8.8% projected for private sector banks and 6.5% for foreign banks, RBI said.

However, the central bank cautioned that an uncertain economic outlook and the extent to which regulatory dispensation under restructuring is utilised, could make the projected ratios susceptible to change.
The central bank also said that the results of the stress test should not  ..taken as forecast