MUMBAI: Even as the government continues its fights against black money through a slew of measures, including demonetisation, bad loans of large borrowers surged between March and September this year.
The situation is only set to get worse in the coming years, according to the stress test conducted by the RBI. According to data released by the central bank on Thursday, bad loans - or the gross non-performing advances - rose to 9.1 percent in September from 7.8 percent in March.
While the share of large borrowers in the total loan portfolio declined during this period, their share in bad loans saw an increase. Also, according to the stress test, the bad loans may increase from 9.1 percent in September to 9.8 percent by March 2017 and again to a whopping 10.1 per cent by March 2018.
The Public Sector Banks continue to register the maximum numbers of bad loans, according to the data. If the trend continues, the ratio of bad loans of Public Sector Banks could increase from 11.8 percent in September 2016 to 12.5 per cent by March 2017 and then again to 12.9 per cent in March 2018. Under a severe stress scenario, the report says, the numbers could increase further.
“Given the higher levels of impairment, the banks may remain risk averse in the near future as they clean up their balance sheets and their capital position may remain insufficient to support higher credit growth,” the RBI said in its Financial Stability Report. “If the macroeconomic conditions deteriorate, the GNPA ratio may increase further,” it added.