COVID-19 LOCKDOWN: Bank NPAs may worsen by FY21 end
Published On: Thursday, June 4, 2020 | By: Team KnowMyStock
Gross NPAs of banks are likely to worsen to 11.3-11.6 percent by the end of this financial year from 8.6 percent as of March 2020, due to disruptions caused by the coronavirus pandemic, according to a report. Fresh gross slippages are estimated to be at 5-5.5 percent of standard advances during 2020-21, which will increase the banks' credit provision and impact their earnings, rating agency Icra said in a report. With an increase in stress on asset quality and profitability, state-owned banks may need Rs 45,000-82,500 crore of capital in this financial year under a weak credit growth scenario, it said.
"The RBI moratorium to borrowers was extended by another three months till August 31, 2020, and we expect the asset quality stress is likely to reflect only in third and fourth quarters of 2020-21 results," the rating agency's sector head (financial sector ratings) Anil Gupta said.
It said that while the lockdown has surely impacted the debt-servicing ability of borrowers, the extent of revival in economic activities as the restrictions are eased will drive the final impact on asset quality of banks.
We are on Telegram!
JOIN our telegram channel to receive updates on Financial News and Stock and FNO Tips.
Click Here!
Follow Us On:
