Banks’ NPAs may reach 9.8% in FY22, but banks have enough capital: RBI

In the Financial Stability Report published by the central bank every two years, Governor Shaktikanta Das has written that the second wave of Corona has had a serious impact on business.

The central bank RBI estimates that the NPAs of banks may increase to 9.8 percent on an annual basis by the end of the current financial year 2021-22 i.e. March 20222. Banks’ NPAs may increase by 232 basis points (2.32 per cent) year-on-year by the end of the current financial year, although according to the RBI, the bank has enough capital to meet any stress.
In the Financial Stability Report published by the central bank every two years, Governor Shaktikanta Das has written that the second wave of Corona has had a serious impact on business. If this stress remains moderate, then gross NPA can increase to 10.36 per cent but if the pressure on business is severe then gross NPA can reach 11.22 per cent.

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Banks have sufficient capital – RBI

According to the RBI, the situation is expected to improve in the case of public sector banks and they may have to face less than before. However, according to the estimates of the central bank, by March 2022 next year, the bad loan ratio of public sector banks may reach 12.5 percent, which was 9.54 percent in March this year. According to the central bank, despite adverse conditions like the corona epidemic, the good thing is that banks have sufficient capital (well-capitalized) and the provision coverage ratio is high. RBI estimates that no matter how bad the situation gets, the fall in capital adequacy may be relatively small and the adequacy ratio of all 46 banks will remain above the minimum 9 per cent fixed by the regulator.

Economic activities start improving from the end of May

The sectors which have suffered the most due to the lockdown/curfew imposed due to Corona are retail trade, travel, hospitality, aviation and MSMEs. Credit guarantee schemes brought by the central government for MSMEs have also been started for the healthcare sector, which will help in saving business and reduce the chances of default. According to Das, the second wave of Corona epidemic has had a serious impact on the country, but since the end of May, economic activities have started improving.