The NPA ratio of banks may increase due to Corona epidemic. This situation is being created due to non-recovery of bad loans from the banks. This was mentioned by RBI in its July edition.
Reserve Bank of India report
Many problems have increased due to the effect of Corona epidemic. This has also had a negative impact on the gross NPAs i.e. bad loans of the banks. The Reserve Bank of India’s (RBI) July 2021 edition feared that the gross non-performing assets (GNPA) ratio of banks may rise to 9.8-11.22 per cent in March 2022. At the end of March 2021, the Gross NPA Ratio for the banking sector was 7.48 per cent.
It is to be known that any loan is classified as NPA. Its ratio deteriorates when it has not been paid for more than 90 days. The central bank said that due to the effect of Corona, the NPA ratio of all banks may increase to 9.8 percent by March 2022. If the issue is more serious, it can first go up to 10.36 percent and later to 11.22 percent.
RBI said that the GNPA ratio of PSBs (Public Sector Banks) across bank groups is 9.54 per cent in March 2021, which has increased to 12.52 per cent by March 2022 under the baseline scenario. However, this is an improvement over the past and is indicative of pandemic proofing by regulatory support.” On the other hand, if we talk about private banks and foreign banks, then their GNPA ratio at baseline is in a very tense situation. These range from 5.82 percent to 6.04 percent to 6.46 percent and from 4.90 percent to 5.35 percent to 5.97 percent respectively.
“The consumer credit ratio has deteriorated after the loan moratorium program ended in September 2020,” the central bank said. Let us inform that in the FSR report published in January this year, the GNPA was estimated to go up to 13.5 percent by September 2021. However, it was said that even in times of stress, banks have sufficient capital at the aggregate and individual level.
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