Gross NPA ratio of banks likely to shoot up to 9.5% by September 2022: RBI

The gross non-performing asset (GNPA) ratio of scheduled commercial banks (SCBs) was likely to increase to 9.5 per cent in September 2022 from 6.9 per cent in September 2021 in a severe stress scenario, the Reserve Bank of India said on Wednesday. 

“Macro stress tests for credit risk indicate that the gross non-performing asset (GNPA) ratio of SCBs may increase from 6.9 per cent in September 2021 to 8.1 per cent by September 2022 under the baseline scenario and to 9.5 per cent under a severe stress scenario,” the central bank noted its 24th issue of the Financial Stability Report (FSR) released on Wednesday.

In the report, the central bank noted that the SCBs would, however, have sufficient capital, both at the aggregate and individual levels, even under stress conditions. 

Emerging signs of stress in micro, small and medium enterprises (MSMEs) as also in the microfinance segment called for close monitoring of these portfolios going forward, it said. 

The capital to risk-weighted assets ratio (CRAR) of SCBs rose to a new peak of 16.6 per cent, and their provisioning coverage ratio (PCR) stood at 68.1 per cent in September 2021. 

In the Reserve Bank’s latest Systemic Risk Survey (SRS), all broad categories of risks to the financial system – global; macroeconomic; financial market; institutional; and general – were perceived as medium in magnitude, but risks arising on account of global and financial markets were rated higher than the rest. 

Commodity prices, domestic inflation, equity price volatility, asset quality deterioration, credit growth and cyber disruptions were rated as the major risks. 

In the report, the RBI noted that the global recovery had been losing momentum in the second half of 2021, impacted by resurgence of infections in several parts of the world, supply disruptions and bottlenecks, persistent inflationary pressures and shifts in monetary policy stances and actions across systemic advanced economy central banks as also some emerging-market economies. 

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