Corona Impact: NPAs of banks to reach 9.6 to 9.7% in FY21

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According to the Icra Rating, the GNPA of banks may increase further to 9.9-10.2 per cent by March 2022.

The effect of loan moratorium will be seen

Banks’ gross non-performing assets (GNPA) are expected to grow by 9.6-9.7 per cent by 31 March 2021 due to relief measures such as loan installment rebate. According to the Icra Rating, the GNPA of banks may increase further to 9.9-10.2 per cent by March 2022. The rating agency said in its report that gross NPAs for banks were significantly lower at 1.8 lakhs during the first nine months of the current financial year 2020-21, despite the ability to take loans due to the COVID-19 Pandemic. Crore rupees, which was 3.6 lakh crores in the financial year 2019-20.

The rating agency said that this happened due to various relief measures, however, pressure on asset quality is expected to resume. “We estimate that GNPA (excluding write-offs) will increase to 9.6-9.7 per cent by 31 March 2021, and to 9.9-10.2 per cent by 31 March 2022,” said Incra. GNPA was 8.6 per cent as of 31 March 2020.

The effect of loan moratorium will be seen

Head of Incra (financial sector ratings) Anil Gupta said that after relief measures like loan installment moratorium, the impact on assets quality will be seen in FY 2021 and FY 2022, as various interventions and relief measures have led to banks’ profitability and capital. But a major injury stopped.

Banks may lose 2 thousand crores

Explain that last week, the Supreme Court had announced a relaxation in interest payment on interest during the loan moratorium period. However, this will be applicable to more than 2 crore loans. At a lesser amount, interest was waived on interest only in November 2020. Sources say that due to the latest decision of the Supreme Court, public sector banks may have to bear a loss of Rs 1,800 to 2,000 crores. During the rebate on installment payments, the government has incurred a burden of Rs 5,500 crore from the Compounding Interest Support Scheme in 2020-21.

Last year, due to the COVID-19 epidemic, the Reserve Bank gave exemption on payment of installments on all term loans from March 1 to May 31, 2020. Later this period was extended to 31 August. The Supreme Court directive is limited to only those accounts which have taken advantage of the payment exemption. According to such rough estimates, the public sector banks will incur a loss of Rs 2,000 crore.

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(With language input)

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Bhagyashree Soni
Bhagyashree Soni
Bhagyashree Soni is a software engineer with soft writing skills. She is a degree holder from the International School of Entrepreneurial Leadership. She has been a state-level badminton champion and chess player. A woman with a forthright attitude enjoys her writing passion as her chosen career. Writing in the context of feminism, social-cause and entreprenurship is her forte.
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