It noted that the severity of the situation, the need for proactive building up of adequate capital to withstand possible asset quality deterioration…reports Asian Lite News
The gross non-performing asset (GNPA) of scheduled commercial banks (SCB) are likely to increase to 13.5 per cent by September 2021 in the existing scenario, according to the RBI’s Financial Stability Report for January.
In case of a severe stress, the ratio may go up to as high as 14.8 per cent, it said.
“Macro stress tests incorporating the first advance estimates of gross domestic product (GDP) for 2020-21 released on January 7, 2021 indicate that the GNPA ratio of all SCBs may increase from 7.5 per cent in September 2020 to 13.5 per cent by September 2021 under the baseline scenario,” said the report.
It noted that the severity of the situation, the need for proactive building up of adequate capital to withstand possible asset quality deterioration.
The report said that the capital to risk-weighted assets ratio (CRAR) of SCBs improved to 15.8 per cent in September 2020 from 14.7 per cent in March 2020, while their GNPA ratio declined to 7.5 per cent from 8.4 per cent, and the provision coverage ratio (PCR) improved to 72.4 per cent from 66.2 per cent over this period.
Bank credit growth has remained subdued, with the moderation being broad-based across bank groups, showed the report.
Private sector banks witnessed a rise in non-performing assets (NPA) in respect of large borrowal accounts with exposure of Rs five crore or above.
A recent report by the Reserve Bank of India (RBI), cited that gross NPA ratio as well as the ratio of restructured standard assets to total funded amounts emanating from larger borrowal accounts in the public sector banks have gone down.
At the end of September 2020, large borrowal accounts constituted 79.8 per cent of NPAs and 53.7 per cent of total loans, it said.
“During 2019-20, PSBs’ GNPA ratio as well as the ratio of restructured standard assets to total funded amounts emanating from larger borrowal accounts trended downwards. On the contrary, PVBs experienced an increasing share of NPAs in respect of such accounts,” it said.
Further, the share of special mention accounts (SMA-0) witnessed a sharp rise in September 2020, which, according to the report, may be an initial sign of stress after lifting of moratorium on August 31, 2020.
However, the share of other categories of SMAs i.e., SMA-1 and SMA-2 remained at a relatively lower level, it said.