MUMBAI: Banks are likely to see a growth of 8-9% in gross non-performing assets (NPAs) of total borrowings at the end of this fiscal, from 7.5% last year, rating agency Crisil said in a report on Tuesday. .
Senior director and deputy chief rating officer Krishnan Sitaraman said retail customers and the micro, small and medium (MSME) segments will be led, noting that they represent 40% of the total bank credit.
“Stressed assets in these segments are growing by 4-5% and 17-18% respectively by the end of this financial year (March 2022). The numbers would have been even higher, but for write-offs, mainly vulnerable section,” Sitaraman said.
Last year, the Reserve Bank of India (RBI) allowed banks to give a moratorium of six months to all small borrowers.
It later allowed lenders to offer a one-time loan-restructuring facility to help curb rising bad loans and give borrowers more time to repay their loans.
Crisil said that despite these measures, stressed assets will rise in the retail sector, with home loans being the least affected and unsecured loans the worst.
Crisil said the corporate segment is expected to be more resilient as a major part of the stress in the corporate portfolio was already identified during the asset quality review initiated by RBI in 2015.
The agency said the performance of the restructured portfolio would need to be closely monitored, but this time it is expected to be lower from the restructured book.
Subha Sri Narayanan, Director, CRISIL Ratings said, “Recent trends indicate that a fair proportion of borrowers, mainly in the retail sector, have started making additional payments, as their cash flows have improved.”
“MSMEs, however, may take longer to stabilize and we remain cautious.”
Senior director and deputy chief rating officer Krishnan Sitaraman said retail customers and the micro, small and medium (MSME) segments will be led, noting that they represent 40% of the total bank credit.
“Stressed assets in these segments are growing by 4-5% and 17-18% respectively by the end of this financial year (March 2022). The numbers would have been even higher, but for write-offs, mainly vulnerable section,” Sitaraman said.
Last year, the Reserve Bank of India (RBI) allowed banks to give a moratorium of six months to all small borrowers.
It later allowed lenders to offer a one-time loan-restructuring facility to help curb rising bad loans and give borrowers more time to repay their loans.
Crisil said that despite these measures, stressed assets will rise in the retail sector, with home loans being the least affected and unsecured loans the worst.
Crisil said the corporate segment is expected to be more resilient as a major part of the stress in the corporate portfolio was already identified during the asset quality review initiated by RBI in 2015.
The agency said the performance of the restructured portfolio would need to be closely monitored, but this time it is expected to be lower from the restructured book.
Subha Sri Narayanan, Director, CRISIL Ratings said, “Recent trends indicate that a fair proportion of borrowers, mainly in the retail sector, have started making additional payments, as their cash flows have improved.”
“MSMEs, however, may take longer to stabilize and we remain cautious.”
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