Bad Loans May Rise Significantly, Says RBI s Financial Stability Report The gross Non-Performing Assets of banks may increase from 7.5 per cent in September 2020 to 14.8 per cent under a severe stress scenario
Updated: January 12, 2021 8:59 am IST
Banks may see bad loans double despite signs of an improvement in the economic impact of the COVID-19
Banks may see bad loans double despite signs of an improvement in the economic impact of the COVID-19 pandemic, a report from the Financial Stability and Development Council said on Monday.
The gross Non-Performing Assets of banks may increase from 7.5 per cent in September 2020 to 14.8 per cent under a severe stress scenario. Even under a baseline scenario it may rise to 13.5 per cent by September 2021, the council said.
Read more about Indian banks bad loans may rise significantly: Financial stability report on Business Standard. Indian banks may see bad loans double despite signs of an improvement in the economic impact of the Covid-19 pandemic
The Reserve Bank of India’s (RBI’s) Financial Stability Report (FSR) of December 2020 has stated that banks’ gross non-performing assets (GNPAs) may rise sharply to 13.5 per cent by September 2021, and escalate to 14.8 per cent, nearly double the 7.5 per cent in the same period of 2019-20, under the severe stress scenario. And banks will have to brace for a rollback of regulatory forbearance that was announced in the wake of the pandemic, and enhance their capital positions. The FSR, released on Monday, gave a caveat: “Considering the uncertainty regarding the unfolding economic outlook, and the extent to which regulatory dispensation under restructuring is utilised, the projected ratios are susceptible to change in a nonlinear fashion”.