The quantum of gross non-performing assets (GNPAs) of scheduled commercial banks (SCBs) is expected to decline by the end of March, despite being a challenging year, compared with FY20 following write-offs, lower slippages, restructuring plans, ECLGS support for MSMEs and resilience in the economy, Care Ratings said in a report.
However, with the Supreme Court judgement allowing the recognition of NPAs, FY21-end numbers are expected to be either similar or slightly above the Q3FY21 numbers, it said.
Stating that public sector banks (PSBs) accounted for more than 80% of SCBs’ GNPA till FY19, it said more than the past years, the PSBs had registered a substantial contraction in GNPAs.
It said PSB GNPA was expected to be about ₹6 lakh crore at the end of March compared with ₹6.8 lakh crore as at the end of March 2020.
As per the report, GNPAs of private banks, that had breached the ₹2 lakh-crore mark in December 2019 is expected to be about ₹1.96 lakh crore by the end of March 2021.
“The GNPA ratio of SCBs had been on a downward trajectory since last two years,” Care said. “SCBs asset quality has seen some improvement due to recoveries and higher write-offs by multiple banks and OTR schemes announced by the RBI.”
“The PSB GNPA ratio continues to remain significantly higher than the private banks. The PSB NPA ratio moved up by 336 basis points in the FY18 to touch 14.1%. Subsequently, the ratio had been on a declining trend,” it added.
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