STOCK MARKET BSE NSE

Bank NPAs may inch up on stressed retail, MSME segments, says Crisil

Gross non-performing assets (NPAs) of banks will rise to 8-9% this fiscal, well below the peak of 11.2% seen at the end of fiscal 2018, the rating agency said in a report.

Published: 20th October 2021 08:58 AM  |   Last Updated: 20th October 2021 08:58 AM   |  A+A-

RBI

The Reserve Bank of India. (File photo | PTI)

By Express News Service

NEW DELHI:  Would the asset quality of banks deteriorate due to stress in the MSME and retail segment? Rating agency Crisil believes that gross NPAs of the bank could reach 8-9% by March 2022 due to increased stressed assets in the retail segment.

Gross non-performing assets (NPAs) of banks will rise to 8-9% this fiscal, well below the peak of 11.2% seen at the end of fiscal 2018, the rating agency said in a report. It, though, feels that the Covid-19 relief measures such as the restructuring dispensation, and the Emergency Credit Line Guarantee Scheme (ECLGS) would help limit the rise (in NPA).

However, it foresees that with around 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%. Krishnan Sitaraman, senior director and deputy chief ratings officer, Crisil Ratings, says that stressed assets in retail and MSME segments, which together form 40% of bank credit, are likely to increase to 4-5% and 17-18%, respectively, by the end of the current financial year.

According to the Reserve Bank of India (RBI), the asset quality of banks improved during 2021- 22 (up to June), with the overall NPA ratio declining to 7.5% in June 2021 from 8% a year ago. The NPA ratio, however, in respect of retail loans and services increased over the same period.

Moody’s positive on asset quality
”The quality of corporate loans has improved, indicating that banks have recognised and provisioned for all legacy problem loans in this segment. The quality of retail loans has deteriorated, but to a limited degree because large-scale job losses have not occurred,” Moody’s said in its report.



Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp