Banks’ gross non-performing assets (GNPAs) could rise from 6.9 percent in September 2021 to 8.1 percent in September 2022 in the baseline scenario, while they could rise to 9.5 percent in the severe stress scenario.
This is according to the financial stability report of the Reserve Bank of India (RBI).
However, the report also said that scheduled commercial banks would have adequate capital, both on an aggregate and individual level, even under stressful conditions.
It further said that emerging signs of stress in micro, small and medium-sized enterprises (MSMEs) and also in the microfinance segment require close monitoring of these portfolios going forward.
The RBI report noted that the global economic recovery slowed in the second half of 2021, mainly due to the re-emergence of Coronavirus infections and the new variant Omicron.
Supply disruptions and bottlenecks, elevated levels of inflation and shifts in monetary policy stances and actions in both advanced and emerging market economies have also been factors behind the sluggish economic recovery, the RBI report said.
However, on the domestic front, advances in vaccination have enabled the recovery from the debilitating second wave of the pandemic, despite signs of a slowdown more recently, it said, adding that the corporate sector is gaining momentum and growth of improves bank lending .
The capital-to-risk-weighted asset ratio (CRAR) of scheduled commercial banks rose to a new high of 16.6 percent and their provision coverage ratio (PCR) stood at 68.1 percent in September 2021.