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Rating agency Crisil in its latest report has said that gross non-performing assets (NPAs) of Indian banks may rise to 8-9 percent in the current financial year (FY22) but this will be much below the FY18 levels when NPAs reached a peak of 11.2 percent. However, it said the Covid-19 relief measures such as the restructuring dispensation, and the Emergency Credit Line Guarantee Scheme (ECLGS) will help limit the rise in banks gross NPAs.

According to the agency, with around 2 percent of bank credit expected under restructuring by the end of this fiscal, stressed assets-comprising gross NPAs and loan book under restructuring-should touch 10-11 percent this fiscal.  It stated that the retail and MSME segments, which together form close to 40 percent of bank credit, are expected to see higher accretion of NPAs and stressed assets this time around. It also noted that stressed assets in these two segments are seen rising to 4-5 percent and 17-18 percent, respectively, by this fiscal end.

The report expects the corporate segment to be far more resilient. It said a large part of the stress in the corporate portfolio had already been recognised during the asset quality review initiated five years ago. It said that, coupled with the secular deleveraging trend, has strengthened the balance sheets of corporates, and enabled them to tide over the pandemic relatively unscathed compared with retail and MSME borrowers.