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India Ratings and Research (Ind-Ra) in its latest report has said that private sector banks' slippages and write-offs from loans restructured after the COVID-19 pandemic are nearly double than that of public sector banks (PSBs). It said private sector banks have seen slippages and loan write-offs at 44 per cent, as against 23 per cent in case of PSBs. 

The domestic rating agency analysed annual results of lenders for FY23. It found that the peak of restructured assets in bank books was in September 2022, when the overall quantum of recast loans had touched Rs 2.2 lakh crore. It said while there could be some more slippages, banks are of the view that the performance of the restructured portfolio would broadly mirror the performance of the overall portfolio. It can be noted that in the aftermath of the pandemic, which led to a hasty lockdown that led to a contraction in the economy, the RBI had announced a restructuring scheme followed by another one. It said the COVID restructuring experience has been relatively benign, despite the unpleasant experiences in the past with similar schemes. 

On the overall asset quality front, Ind-Ra said banks are close to a clean slate as all of them reported improvement on asset front in FY23. Banks are seeing the best-ever asset quality in the past 10 years and the gross non-performing assets (GNPAs) ratio for the banking system improved to 4 per cent at the end of FY23. For state-owned banks, GNPAs improved to 5 per cent in FY23 from the peak of 14.1 per cent in FY18, while the same for private sector banks stands at 2.3 per cent from 6.3 per cent. Both categories of banks are also seeing a convergence in their asset quality and credit cost related parameters.