Monday, Jul 13, 2020 | Last Update : 11:20 AM IST

111th Day Of Lockdown

Maharashtra25442714032510289 Tamil Nadu138470895321966 Delhi112494899683371 Gujarat41906291982046 Karnataka3884315411686 Uttar Pradesh3647623334934 Telangana3467122482356 West Bengal3001318581932 Andhra Pradesh2916815412328 Rajasthan2439218103510 Haryana2124015983301 Madhya Pradesh1763212876653 Assam168071089541 Bihar1630511953125 Odisha13737875091 Jammu and Kashmir105135979179 Kerala7874409532 Punjab78215392199 Chhatisgarh4081315319 Jharkhand3760230831 Uttarakhand3537278647 Goa2453120714 Tripura206714212 Manipur16098960 Puducherry141873918 Himachal Pradesh121391610 Nagaland8453270 Chandigarh5594178 Arunachal Pradesh3601382 Meghalaya295452 Mizoram2311500 Sikkim164810
  Business   In Other News  28 Dec 2019  Bad loans to rise in 2020, says RBI

Bad loans to rise in 2020, says RBI

Published : Dec 28, 2019, 2:29 am IST
Updated : Dec 28, 2019, 2:29 am IST

The gross non-performing assets (GNPA) ratio may increase to 9.9 per cent by September 2020 from 9.3 per cent.

Reserve Bank of India
 Reserve Bank of India

Asset quality of commercial banks could worsen next year primarily due to the economic slowdown, increase in slippages and declining credit growth, warned the Reserve Bank of India (RBI) on Friday. The gross non-performing assets (GNPA) ratio may increase to 9.9 per cent by September 2020 from 9.3 per cent.

“The RBI’s macro-stress tests for credit risk show that under the baseline scenario, schedule commercial banks GNPA ratio may increase from 9.3 per cent in September 2019 to 9.9 per cent by September 2020 primarily due to change in macroeconomic scenario, marginal increase in slippages and the denominator effect of declining credit growth,” said the RBI in the 20th issue of the Financial Stabillity Report.

Among the bank groups, state-owned banks GNPA ratios may increase to 13.2 per cent by September 2020 from 12.7 per cent in September 2019 whereas for private banks it may increase to 4.2 per cent from 3.9 per cent; and for foreign banks, to 3.1 per cent from 2.9 per cent.

“Continuing the trend witnessed in the previous half-year, the banking sector has shown signs of stabilisation. That said, the performance of public sector banks (PSBs) needs to improve and they need efforts to build buffers against disproportionate operational risk losses. Private sector banking space also needs to focus on aspects of corporate governance,” wrote Shaktikanta Das, governor of RBI, in the foreword to the report.

Under the assumed baseline macro scenario, capital to risk (weighted) assets ratio (CRAR) for a system of 53 banks is projected to come down to 14.1 per cent by September 2020 from 14.9 per cent in September 2019. Further deterioration of CRAR is projected under the stress scenarios. Three commercial banks may have CRAR below the minimum regulatory level of 9 per cent by September 2020 without considering any further planned recapitalisation. However, if macroeconomic conditions deteriorate, five scheduled commercial banks (SCBs) may record CRAR below 9 per cent under a severe stress scenario, said the RBI report. On the same lines, the common equity tier-I (CET-I) capital ratio may decline from 11.9 per cent to 11.3 per cent in September 2020.

SCB’s credit growth remained subdued at 8.7 per cent year-on-year in September 2019, though private sector banks registered double-digit credit growth of 16.5 per cent.

The RBI, meanwhile, pointed that the health of urban cooperative banks worsened in the second quarter with a fall in capital adequacy and a rise in gross NPAs. As on September 2019, the capital adequacy ratio of schedule urban co-operative banks (SUCBs) fell 9.8 percent, down from 13.5 percent in the quarter that ended in March. Also, the gross NPA ratio rose to 10.5 percent, down from 6.4 percent in the same period.

Under different credit risk shocks, the RBI tests revealed that from 10 to 34 SUCBs will fail to maintain their minimum capital adequacy requirements, depending upon the severity of the shock.

Tags: reserve bank of india