In the first six months of 2021, the non-performing assets (NPAs) of banks are projected to increase. According to a survey by FICCI-IBA, the asset quality of banks may deteriorate in the first half of 2021, which showed improvement in the first half of 2020. The deterioration of asset quality of banks is due to increasing difficulty in recovery of loans given by them. This was revealed in the 12th round of the Bankers Survey between July and December 2020. The survey was done in 20 banks in the public and private sector, foreign banks were also included in the survey.
NPA decreased in second half of 2020
Nearly half of the participants in the survey said that the NPA decreased in the second half of 2020. Nearly 78 per cent of the participants in public sector banks accepted the reduction in NPAs. However, in terms of future forecasts, 68 per cent of participating bankers said the NPA (ratio of loans declared stranded in real loan installments to realization) in the first half of 2021 would be more than 10 per cent, the survey said.
About 37 percent of the participants said that the NPA would be more than 12 percent. The Financial Stability Report of the Reserve Bank of India (RBI) released in January this year showed that by September 2021, banks’ gross non-performing assets (NPAs) could increase by 13.5 per cent.
NPAs of PSU banks reduced by Rs 1 lakh crore in the current financial year
In the first months of the current financial year 2020-21, the NPAs of public sector banks declined by Rs 1 lakh crore. During this period, the NPAs of banks have come down by Rs 6,78,317 crores to Rs 5,77,137 crores. In response to a question in Parliament, the government said, the reduction in NPA has come due to the steps taken by the government, resolution, recapitalization and reforms.
NPAs of banks can reach 13.5%
Explain that the RBI had said in its Financial Stability Report (FSR) in January that the gross NPAs of banks could reach 13.5 per cent by September 2021. The survey said that the sectors which are expected to have the highest NPAs are Tourism and Hospitality, MSME, Aviation and Restaurants sectors.
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