RBI has said that the total NPA of banks can increase in the worst case
The total bad assets (GNPA) of banks could increase from 6.9% in September 2021 to 8.1% in September 2022 under the baseline scenario, while in the severe stress scenario, they can increase to 9.5%.
This was revealed by the financial stability report of the Reserve Bank of India (RBI).
However, the report also said commercial banks under the plan will have sufficient capital, both at the aggregate level and at the individual level, even under stressful conditions.
It adds that signs of stress are emerging in micro, small and medium enterprises (MSMEs) and also in the microfinance segment, calling for close monitoring of these portfolios going forward. future.
The RBI report noted that the global economic recovery lost momentum in the second half of 2021 mainly due to the recurrence of Coronavirus infections and the new variant Omicron.
In addition, supply disruptions and bottlenecks, rising levels of inflation, and shifts in monetary policy attitudes and actions in advanced as well as emerging market economies, are also factors behind the sluggish economic recovery, the RBI report added.
On the domestic front, however, progress in vaccinations has allowed the recovery to regain traction after a second wave of the pandemic weakened, despite recent signs of slowing, it added that the region businesses are being consolidated and bank credit growth is improving. .
Commercial banks’ risk-weighted capital-to-assets ratio (CRAR) is expected to rise to a new peak of 16.6% and their contingency coverage ratio (PCR) at 68 .1% in September 2021.
