Thursday, October 21, 2021

CRISIL: Bank gross NPAs to rise to 8-9%, stressed assets to touch 10-11%

CRISIL: Bank gross NPAs to rise to 8-9%, stressed assets to touch 10-11%

CRISIL in its latest report said that banks gross non-performing assets (NPAs) will rise to 8-9% this fiscal. However, the latest expectations are still below the peak of 11.2% seen at the end of fiscal 2018.

As per Crisil, the Covid-19 relief measures such as the restructuring dispensation, and the Emergency Credit Line Guarantee Scheme (ECLGS) will help limit the rise.

The rating agency highlighted that with ~2% of bank credit expected under restructuring by the end of this fiscal, stressed assets - comprising gross NPAs and loan book under restructuring - should touch 10-11%.

According to Crisil's report, the retail segment, which had a relatively stable run over the past decade, has been singed by the pandemic, with salaried and self-employed borrowers alike facing significant income challenges and higher medical expenses, especially in the second wave. Thus, in a first-of-its-kind move, the Reserve Bank of India (RBI) introduced loan restructuring for retail borrowers to help them tide over the situation. This followed a six-month moratorium permitted by lenders last fiscal.

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