New Delhi: The total bad loans of the Indian banks is likely to rise by six percentage points to 14.7 per cent by the end of the current financial year, the Reserve Bank of India Friday warned, citing a worrying trend of bad loans accumulation with small borrowers of late.
The report comes days after RBI Governor Shaktikanta Das underlined the need for further recapitalization of PSU banks to increase their systemic resilience amid Covid-19 stress.
Macro stress tests for credit risk indicate that the gross NPA ratio of all banks may increase from 8.5 per cent in March 2020 to 12.5 per cent March 2021 under the baseline scenario. If the macroeconomic environment worsens further, the ratio may escalate to 14.7 per cent under very severe stress,” the RBI said in its Financial Stability Report.
It said the public sector banks’ gross bad loans ratio of 11.3 per cent at the end of March may increase to 15.2 per cent by March 2021 under the baseline scenario. Private banks may see an increase from 4.2 per cent to 7.3 per cent.
