Indian banks` gross NPAs likely to decline 90 bps to less than 5% in FY23: Assocham-Crisil study
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A joint study carried out by Assocham-Crisil Rating has unveiled that gross Non-Performing Assets (NPAs) of Indian banks are expected to decline 90 basis points (bps) to less than five per cent in FY23 and hit a decadal low of sub-four per cent by March 31, 2024. The study attributed the decline in gross NPAs to the post-Covid economic recovery and higher credit growth.
It said the biggest improvement would be in the corporate loan segment, where gross NPAs are seen falling below two per cent in the next fiscal from a peak of about 16 per cent as on March 31, 2018. This follows significant clean-up of books by banks in recent years, as well as strengthened risk management and underwriting, which has led to higher preference for borrowers with better credit profiles. The steady improvement in corporate asset quality is clearly manifested in key indicators such as the credit quality of bank exposures.
The study noted that the gross NPAs in the MSME segment, which suffered the most during the pandemic, may rise to 10-11 per cent by March 2024 from about 9.3 per cent as on March 31, 2022. It revealed that while relief measures did help contain asset quality deterioration last fiscal, the segment saw the most restructuring, at about six per cent, compared with two per cent for the overall banking sector.
