Banks gross NPA may jump to 13.5% by Sep 2021: RBI

by Nidhi Bhati

The Reserve Bank of India (RBI) in its financial stability report (FSR) for December 2020 stated that banks’ gross non-performing assets (GNPAs) may rise sharply to 13.5 per cent by September 2021 as compared to 7.5 per cent during the corresponding period a year ago. However, if the macroeconomic environment worsens into a severe stress scenario, the GNPA ratio may escalate to 14.8 per cent. The FSR mentioned that stress test results indicate that four banks may fail to meet the minimum capital level by September 2021 under the baseline scenario, without factoring in any capital infusion by stakeholders. In the severe stress scenario, the number of such banks may rise to nine. Noting that in the initial phase of the coronavirus outbreak, policy actions were geared towards restoring normal functioning and mitigating stress, the report said the focus was now on supporting the recovery and preserving the solvency of businesses and households.