By Ankur Mishra
Reserve Bank of India Governor Shaktikanta Das on Friday stated that non-performing assets (NPAs) in the banking sector might stay inside the variety of projections made in the last monetary stability report (FSR).
However, Das specified that final facts would be out in the upcoming FSR, which will be released later this month.
The earlier FSR released in January 2021 had projected that the gross non-performing assets (GNPAs) of banks might rise to 13.5% by September 2021 in the baseline situation.
“On the NPA situation, whatever projection we had given earlier in the last FSR. I think it will be within that (range),” RBI Governor Shaktikanta Das stated in a press conference on Friday just after releasing policy.
“I think the figures (NPAs) are quite manageable, but I would not say anything beyond that because our teams are assessing the numbers and we will spell out details in the upcoming financial stability report (FSR) later this month, ” Das additional stated.
In the policy statement, the RBI Governor also emphasised on creating capital buffers and sufficient provisioning for banks and NBFCs to mitigate the effect of Covid-19. Last week, RBI in its annual report, stated that gross NPA ratio of banks decreased to 6.8% in December 2020 from 8.2% in March 2020.
The prudent provisioning by banks, even more than and above regulatory prescriptions for accounts availing moratorium and undergoing restructuring, resulted in an improvement in the provision coverage ratio (PCR) of banks, RBI had stated.
PCR enhanced to 75.5% at finish-December 2020 from 66.6% in March 2020. Similarly, the capital to danger-weighted assets ratio (CRAR) of banks rose to 15.9% in December 2020, compared to 14.8% in March 2020.
The capital adequacy ratio of banks was aided by capital raising from the industry by public and private sector banks, and retention of income.
The central bank, in its annual report had, having said that, cautioned that asset high-quality of the banks demands to be closely monitored in the coming quarters.
The regulator had provided the warning as the lenders will have to show a accurate image of the poor loans just after Supreme Court (SC) lifted interim remain on classifying NPAs in March 2021.
In August 2020, RBI had announced a six months moratorium for all term loan borrowers in the wake of Covid-19 effect on borrowers. The Supreme Court had directed lenders to waive compound interest of the borrowers in the course of the moratorium period.