Gross NPAs of banks to rise to 8-9% from 7.5%: Crisil

‘Retail, MSMEs to contribute more to stressed assets, NPAs’

October 19, 2021 09:48 pm | Updated 09:48 pm IST - MUMBAI

Gross non-performing assets (NPAs) of banks are expected to rise to 8-9% this fiscal from 7.5% as on March 31, but they would still remain below the peak of 11.2% seen at the end of fiscal 2018, Crisil Ratings said in a report.

COVID-19 relief measures, such as the restructuring dispensation and the Emergency Credit Line Guarantee Scheme (ECLGS), would help limit the rise, it said.

“With 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%,” the ratings agency said.

“The retail and MSME segments, which together form 40% of bank credit, are expected to see higher accretion of NPAs and stressed assets this time around,” said Krishnan Sitaraman, senior director and deputy chief ratings officer.

‘Write-off effect’

“Stressed assets in these segments are seen rising to 4-5% and 17-18%, respectively, by this fiscal end. The numbers would have trended even higher but for write-offs, primarily in the unsecured segment,” he added.

The rural segment, which was hit harder during the second wave of the pandemic, has also seen a strong recovery. Therefore, stressed assets in the agriculture segment are expected to remain relatively stable, the ratings agency pointed out.

‘Base-case scenario’

It said the estimates were predicated on a base-case scenario of 9.5% GDP growth this fiscal and continued improvement in corporate credit quality.

A virulent third wave and significant deceleration in demand growth could pose significant downside risks to these estimates, it added.

Top News Today

Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.