How is the COVID-19 pandemic and the lockdown likely to impact bank NPAs this year?

We are just about getting the first hints of the impact on banks from a report prepared by India Ratings. The rating agency has highlighted that lockdown and its impact on business could escalate stressed assets of banks. It estimates nearly Rs.550,000 crore worth of slippages in 2020-21. Interestingly, 40% of these slippages are expected to come from non-corporate exposures; essentially retail and MSME loans. The outstanding gross bad loans (Gross NPAs) could increase from Rs.9 trillion to over Rs.14 trillion. In terms of specific sectors, the pressure is expected in from power, infra, construction, hospitality, steel, telecom and realty companies. Most of these sectors also have a multiplier impact on growth, which could make the impact double-edged.