New Delhi, Dec 29 (Bureau) Banks’ non-performing assets (NPAs) could climb up to 9.5 per cent by September 2022 under a severe stress scenario, Reserve Bank of India (RBI) said on Wednesday. “Macro stress tests for credit risk indicate that the gross non-performing asset (GNPA) ratio of SCBs (scheduled commercial banks) may increase from 6.9 per cent in September 2021 to 8.1 per cent by September 2022 under the baseline scenario and to 9.5 per cent under a severe stress scenario,” the RBI said in its Financial Stability Report. The central bank, however, stated that banks would have sufficient capital, both at the aggregate and individual levels, even under stress conditions. The report pointed to the emerging signs of stress in micro, small and medium enterprises (MSMEs) as also in the micro finance segment calling for close monitoring of these portfolios going forward.
The RBI noted that global economic recovery has been losing momentum in the second half of 2021 in the face of resurfacing Covid infections, Omicron, supply disruptions, elevated inflationary levels and shifts in monetary policy stances and actions across advanced economies and emerging market economies. On the domestic front, the central bank said that progress in vaccination has enabled the recovery to regain traction after the debilitating second wave of the pandemic. It said that corporate sector is gaining strength and bank credit growth is improving. The Financial Stability Report noted that capital to risk-weighted assets ratio (CRAR) of banks rose to a new peak of 16.6 per cent and their provisioning coverage ratio (PCR) stood at 68.1 per cent in September 2021.