InvestorQ : How is the gross NPA picture looking after COVID 2.0 for the Indian banks?
Riya Dwivedi made post

How is the gross NPA picture looking after COVID 2.0 for the Indian banks?

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shrinidhi Rajan answered.
5 months ago
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The RBI Financial Stability Report has brough out some interesting data points on the NPA picture of banks. Broadly, it does look like the gross NPAs would mount in FY22 from 7.48% to a level of 9.8%. However, this is only a conservative scenario and in worst-case it could even touch 11.22%. That remains the big risk for banks and clearly, the PSBs are a lot more vulnerable. There will be 100-200 bps worsening for private banks and NBFCs too.

However, the RBI has pointed out that but for the moratorium, the credit crisis would have been really bad with a spate of defaults. On the positive side, the RBI has assured that restructured loans are just 0.9% of total advances, so fully manageable. Also, restructuring was focused on MSMEs, where the stress was the highest. RBI has underlined that banks actually did better due to moratorium as forcing people to pay would have led to a spate of defaults.
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