The RBI’s half-yearly stress tests indicate that Gross Non-Performing Asset may climb from 8.1 percent to 9.5 percent by September next year. This has increased from 6- year low of 6.9 percent in September this year. However, the bad loans would still be in single digits even in a worst-case scenario.
The Financial Stability Report released by RBI on Wednesday projects that outcomes are the most optimistic since the pandemic broke out. It couched with the assurance that banks are adequately capitalized to absorb the credit losses and meet prudential guidelines.
RBI’s trends on Tuesday had shown the sector’s Gross NPA ratio declining from 6.9 percent in September 2021 to 8.2 percent, a year ago. It also warned that the stress test shows Public Sector Banks’ gross NPAs may worsen to 10.5 percent by September next year. In a foreword of the report, RBI Governor Shaktikanta Das said ‘balance sheets of banks remain strong and capital and liquidity buffers are being bolstered to mitigate future shocks.
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