The RBI has toned down its expectation of the stress that banks may face as a result of the Covid crisis, after initially cautioning that non-performing assets could nearly double due to the hit to economic activity. According to stress tests conducted by the RBI: The gross NPA ratio for the banking sector could rise to 9.8% by March 2022 under a baseline, as compared with 7.48% in March 2021. The baseline scenario used in the current stress tests in one where GDP growth for FY22 is at 9.5%. In January, the RBI had said the gross NPA ratio of banks could rise to 13.5% by Sept. 30, 2021 under the then assumed baseline scenario of 0% GDP growth in the second half of FY21. Under the medium stress scenario, where GDP growth is at 6.5%, the gross NPA ratio could rise to 10.36%. Under the severe stress scenario, where GDP growth is at 0.9%, the gross NPA ratio for the banking sector may rise to 11.22%. The outcome of models set by the RBI do not amount to forecasts, the regulator clarified once again. "The dent on balance sheets and performance of financial institutions in India has been much less than what was projected earlier, although a clearer picture will emerge as the effects of regulatory reliefs fully work their way through," wrote RBI Governor. PSU banks, which reported a gross NPA ratio of 9.54% as of March 2021, could see their bad loans rise to 12.52%, under the baseline scenario, the RBI said. Under the severe stress scenario, the gross NPA ratio for public sector banks may rise to 13.95%. For private banks, the gross NPA ratio could rise to 5.82% by March 2022 from 4.78% as of March 2021 under the baseline scenario. Under severe stress, gross bad loans could rise to 6.46%. In backdrop of the above, what do you foresee (write clearly in three sentences for each question) may likely to be the 1. Impact on fresh credit off-take 2. Recovery out of existing loans 3. NPA Scenario going forward
The RBI has toned down its expectation of the stress that banks may face as a result of the Covid crisis, after initially cautioning that non-performing assets could nearly double due to the hit to economic activity. According to stress tests conducted by the RBI: The gross NPA ratio for the banking sector could rise to 9.8% by March 2022 under a baseline, as compared with 7.48% in March 2021.
The baseline scenario used in the current stress tests in one where
Under the medium stress scenario, where GDP growth is at 6.5%, the gross NPA ratio could rise to 10.36%. Under the severe stress scenario, where GDP growth is at 0.9%, the gross NPA ratio for the banking sector may rise to 11.22%.
The outcome of models set by the RBI do not amount to
PSU banks, which reported a gross NPA ratio of 9.54% as of March 2021, could see their bad loans rise to 12.52%, under the baseline scenario, the RBI said. Under the severe stress scenario, the gross NPA ratio for public sector banks may rise to 13.95%.
For private banks, the gross NPA ratio could rise to 5.82% by March 2022 from 4.78% as of March 2021 under the baseline scenario. Under severe stress, gross bad loans could rise to 6.46%.
In backdrop of the above, what do you foresee (write clearly in three sentences for each question) may likely to be the
1. Impact on fresh credit off-take
2. Recovery out of existing loans
3. NPA Scenario going forward
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