Gross non-performing assets (NPAs) of banks are likely to rise to 8 per cent to 9 per cent by the end of the current financial year, compared to 7.5 per cent of last year, rating agency CRISIL said in a report.
The Coronavirus relief measures like restructuring and emergency credit line guarantee scheme will help in limiting the rise, it added.
The rise in NPAs, said Krishnan Sitaraman, CRISIL's senior director and deputy chief ratings officer, will be led mainly by retail clients and micro, small and medium enterprise (MSME) segments.
The agency further said that with 2 per cent bank credit expected under restructuring by the end of this fiscal, stressed assets – consisting of gross NPAs and loan book under restructuring – should touch 10 per cent to 11 per cent.
“Stressed assets in these segments are seen rising to 4 per cent – 5 per cent and 17-18 per cent, respectively, by this fiscal year-end (March 2022). The numbers would have trended even higher but for write-offs, primarily in the unsecured segment,” Mr Sitaraman said.
Reserve Bank of India (RBI) had allowed banks to offer a six-month moratorium to all small borrowers last year and afterwards allowed them to offer a one-time loan restructuring facility to help them prevent rising NPAs. It also gave borrowers more time to repay their debt.
Even after taking these steps, stressed assets in the retail segments will rise, though home loans will be least impacted while unsecured loans will be the worst hit, said CRISIL.
The corporate segment is expected to be more resilient as a large part of the stress in the corporate portfolio was already recognised during an asset quality review initiated by the RBI in 2015, CRISIL said.