New Delhi: The Reserve Bank of India in its latest report mentioned that the Indian banking sector has been hit by bad loans, which are at a 10-year low. The report titled Financial Stability Report (FSR) for June 2023 released on Wednesday also said that toxic assets are projected to decline by March 2024 in terms of baseline stress testing.
Gross non-performing assets (GNPAs) of scheduled commercial banks fell to a 10-year low of 3.9 per cent in March 2023. Apex Bank said it is expected to fall to 3.6 per cent by March 2023.
In addition, the report mentions around 10 per cent retail borrowers have defaulted on their monthly payments. These borrowers balance fairly well as they avoid turning their accounts into NPAs with few or minimal payments before the 90 day deadline.
“While the gross non-performing ratio of retail loans at the system level was low at 1.4 per cent as of March 2023, the share of ‘Special Mention Accounts’ for Scheduled Commercial Banks (SCBs) was relatively high at 7.4 per cent and this is reflected in their retail asset portfolio. 10th of that,” said the latest RBI report.
“As per the stress test results, the GNPA ratio of all SCBs may improve to 3.6 per cent by March 2024 under the baseline scenario,” RBI said.
Moreover, the central bank’s annual report said, “If the macroeconomic environment deteriorates to a moderate or severe stress scenario, the GNPA ratio could increase further to 4.1 per cent and 5.1 per cent, respectively.”