Npa News

After the Reserve Bank of India announced that the asset quality of banks has shown significant improvement in the first half of FY24, market expert Porinju Veliyath took to X (formerly Twitter) to praise the central bank on achieving this extraordinary feat.

According to the Reserve Bank data, Scheduled Commercial Banks (SCBs) have done aggregate recovery of ₹10,16,617 crore during the last nine financial years. According to the Central Repository of Information on Large Credits the total funded amount outstanding of SCBs to corporate company borrowers, which was classified as NPA and had an amount outstanding of ₹1,000 crore or more was ₹1,03,975 crore as on March 31, 2023.

RBI’s Financial Stability Report (FSR) reveals the gross non-performing assets (GNPA) ratio has been gradually trending downwards from 9.3% in September 2019 to a seven-year low at 5.0% in September 2022, while net non-performing assets have dropped to a 10-year low of 1.3% of total assets. The stress tests in RBI’s Financial Stability Report showed that banks are capable of absorbing shocks even under adverse situations. Let's do an in-depth analysis of the report to determine its trend, the policy actions that have been helpful, and what can be done to make things even better.

The corporate loan book of HDFC Bank expanded by an eye-popping 26.5% in the September quarterThe retail loan book seemed to be the only scar from covid. It showed one of its lowest growths ever

The gross NPAs ratio of Indian banks is likely to be 11 to 11.5% by end of current fiscal and they are likely to restructure 4 to 5% of the overall bank credit outstanding, according to Care Rating

Reserve Bank warns SC's stay order will have huge implications for the banking system if it is not lifted immediatelyCentre rules out further relief measures under loan moratorium scheme in Supreme Court affidavit

Restructuring may involve a moratorium of two years on repayments and therefore an elongated repayment schedule. Ergo, banks end up forgoing interest income, thereby dragging down their core income for the period

Fitch says the one-time restructuring exercise of loans could leave the sector saddled with a high bad-loan burden over the next few years if restructured loans do not perform according to agreed milestones

Central bank raps lenders for resorting to manual identification of stressed accounts

Banks may see bad loans rise to the highest in 20 yearsThere are concerns that credit growth, which has been hovering in the 5-6% range, could decline further