India ratings have improved the outlook of banks.
India Ratings has kept the outlook for public sector banks (PSBs) stable from negative, while keeping it in the stable category for private sector banks. The report says that gross non-performing assets (GNPAs) can reach 30 percent.
- February 22, 2021, 10:16 PM IST
The agency has kept a stable outlook for public and private banks
The rating agency has stabilized the public sector banks’ landscape (PSBs Outlook) from negative. At the same time, the outlook for private sector banks has been retained in the stable category as before. According to the agency, gross non-performing assets (GNP + Restructured Loans) in the banking system can reach 30 percent. It has also said that in the second half of the financial year 2020-21, the retail loan segment can register a growth of up to 1.7 times. For public sector banks, stressed retail assets can reach 2.9 per cent during FY 2021-22, up from 2.1 per cent in the current financial year.
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According to India Ratings, stressed retail assets for private banks can grow to 4.3 per cent during FY 2021-22, up from 1.2 per cent in the current financial year. Jindal Hariya, Director (Financial Institutions) of the agency said that in the last 9 months, banks got an opportunity to increase the provision for their old stressed assets. These pressurized assets preceded the Corona epidemic. We estimate that the provision on these NPAs will increase to 75 to 80 percent by the end of the current financial year. This will help the banks to cope with the pressure caused by Kovid-19.