Banks’ gross NPA could rise to 12.5% by March 2021: RBI FSR

Mumbai, July 24

Gross non-performing belongings of all banks could leap to 12.5 per cent by the tip of this fiscal beneath the baseline situation, from 8.5 per cent in March 2020, in response to the Financial Stability Report (FSR) launched by the Reserve Bank.

Under the ‘very severely careworn situation’, gross NPA of banks could enhance to 14.7 per cent by March 2021, the report mentioned.

“The stress checks point out that the GNPA ratio of all scheduled industrial banks (SCBs) could enhance from 8.5 per cent in March 2020 to 12.5 per cent by March 2021 beneath the baseline situation.

“If the macroeconomic environment worsens further, the ratio may escalate to 14.7 per cent under the very severely stressed scenario,” the report confirmed.

The resilience of Indian banking within the face of macroeconomic shocks was examined by means of macrostress checks, which try to assess the impression of cumulative shocks on banks’ stability sheet and generate projections of GNPA ratios and capital to risk-weighted belongings ratio (CRARs) over a one 12 months horizon beneath a baseline and three adverse—medium, extreme and really severe—scenarios, it mentioned.

The baseline situation is derived from the forecasted values of macroeconomic variables reminiscent of GDP development, mixed gross fiscal deficit-to-GDP ratio and CPI inflation amongst others, the report mentioned.

Don’t be extraordinarily risk-averse, RBI governor tells lenders

The nation’s monetary system is sound however lenders ought to desist from excessive danger aversion throughout COVID-19 pandemic and past, Reserve Bank Governor Shaktikanta Das mentioned on Friday.

In his foreword to the bi-annual Financial Stability Report (FSR), Das mentioned the highest precedence proper now for banks and monetary intermediaries needs to be for augmenting capital ranges and enhance resilience.

“In the evolving milieu, while risk management has to be prudent, extreme risk aversion would have adverse outcomes for all,” Das mentioned.

The monetary system in India stays sound; nonetheless, within the present atmosphere, the necessity for monetary intermediaries to proactively increase capital and enhance their resilience has acquired prime precedence, he added. PTI


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