Gross Non Performing Asset (GNPA)Ratio of the banks is expected to rise to 13.5% under a baseline scenario by Septemberthis year. The RBI has warned that in the worst case it may almost double to14.8%. The ratio of gross NPA was 7.5 in September 2020.
Reserve Bank of Indiareleased its Financial Stability Report (FBR) 2021 on Monday. The bi-annualpublication reflects the collective assessment of the sub-committee of FinancialStability and Development Council. It also incorporates the first advanceestimates of national income for 2020-21. The National Statistical Office hasforecasted that the economy may contract further to 7.7% during this fiscal.
RBI in its previous reporthad projected GNPA to rise by March 2021. Covid-19 has been cited in the caseof data not reflecting the true state of bad loan impairment of banks.
Governor of RBI, ShantikantaDas cautioned the banks about their NPA problem. Banks will be called to meetfor the funding requirement of the economy after it faced hurdles owing to thepandemic. “Consequently, maintaining the health of the banking sector remains apolicy priority and preservation of the stability of the financial system is anoverarching goal,’’ Das added.
As far as bank groups areconcerned the GNPA ratio of PSU's that was 9.7% in September 2020 might increaseto 16.2% by September 2021 under the baseline scenario while the GNPA ratio ofprivate banks is likely to increase from 4.6% to 7.9% and foreign banks from2.5% to 5.4%.
The RBI also added thatwhile the banking system's capital base may brave the stress due to Covid-19,some individual banks might need phased assistance of capital infusion.