Bank’s Gross NPA ratios may rise to 13.5% by September 2021: RBI Report

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Mumbai: The gross non-performing Assets (GNPA) ratio of scheduled commercial banks (SCB) may increase to 13.5 per cent from 7.5 per cent in September 2020, said a RBI report.

RBI has also warned that if the macroeconomic environment deteriorates, the ratio may escalate to 14.8 per cent under the severe stress scenario.

“Macro stress tests incorporating the first advance estimates of gross domestic product (GDP) for 2020-21 released on January 7, 2021 indicate that the GNPA ratio of all SCBs may increase from 7.5 per cent in September 2020 to 13.5 per cent by September 2021 under the baseline scenario. The ratio may escalate to 14.8 per cent under a severe stress scenario. This highlights the need for proactive building up of adequate capital to withstand possible asset quality deterioration” said 22nd issue of the financial stability report released by the RBI.  

The report said that the capital to risk-weighted assets ratio (CRAR) of Scheduled Commercial Banks (SCBs) improved to 15.8 per cent in September 2020 from 14.7 per cent in March 2020, while their gross non-performing asset (GNPA) ratio declined to 7.5 per cent from 8.4 per cent, and the provision coverage ratio (PCR) improved to 72.4 per cent from 66.2 per cent over this period.

“Stress tests also indicate that SCBs have sufficient capital at the aggregate level even in the severe stress scenario but, at the individual bank level, several banks may fall below the regulatory minimum if stress aggravates to the severe scenario. The need of the hour is for banks to assess their respective stress situations and follow it up with measures to raise capital proactively” said the RBI report. 

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