Gross NPAs of banks could cross Rs 10 lakh crore by fiscal-end, says Assocham-Crisil report

New Delhi, Sept 14: Driven by slippages in retail and MSME sectors, non-performing assets (NPAs) of banks could rise to 8.5-9 per cent by March 2022, an Assocham and Crisil joint report said on Tuesday.
The gross GNPAs of banks are expected to cross Rs 10 lakh crore by the end of current financial year.
The effectiveness of the Insolvency and Bankruptcy Code (IBC) will be tested by the potential spike in NPAs as the standstill on initiation of fresh insolvency cases for a year ended in March 2021 and as most of the pandemic-induced policies or measures are unlikely to be continued, said the study.
The report said that the expected increase in GNPAs of both banks and non-banks this fiscal because of the pandemic will provide an opportunity for players in the stressed assets market through resolution via various routes, with IBC likely to be the most preferred.
The gross NPAs of banks have declined from the peak seen in March 2018 and were lower as of March 2021 vis-vis March 2020 on account of supportive measures, including the six-month debt moratorium, emergency credit line guarantee scheme (ECLGS) loans and restructuring measures.
The Assocham-Crisil study noted that the current asset quality stress cycle will be different than that witnessed a few years back.
NPAs then came primarily from bigger, chunkier accounts. This time, smaller accounts, especially the MSME and retail segments, are expected to be more vulnerable than large corporates, as the latter have consolidated and deleveraged their balance sheets considerably in the past few years, it said.