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NPAs may rise to 6.9% under severe stress scenario: Finance Ministry

Attributing mounting bad loans to economic sluggishness, Finance Ministry's annual report has said gross non-performing assets (GNPAs) of banks could soar to 6.9 per cent by March 2017 in a "severe stress scenario".


NPAs may rise to 6.9% under severe stress scenario: Finance Ministry

New Delhi: Attributing mounting bad loans to economic sluggishness, Finance Ministry's annual report has said gross non-performing assets (GNPAs) of banks could soar to 6.9 per cent by March 2017 in a "severe stress scenario".

The gross NPA of the scheduled commercial banks, which was 5.14 per cent at the end of September 2015, may rise to 5.4 per cent by September 2016, it said quoting a RBI report.

"If the macro economic conditions deteriorate, the GNPA ratio may increase further, and it could rise to around 6.9 per cent by March 2017 under a severe stress scenario," said the Finance Ministry's 2015-16 Annual Report. 

The Capital to Risk Asset Ratio (CRAR), an indicator of bank's capital adequacy, could decline to 10.4 per cent by March 2017 from 12.7 per cent as of September 2015, it said.

According to the report, the main reasons for increase in NPAs of banks include sluggishness in domestic growth during the recent past, slowdown in recovery in the global economy and continuing uncertainty in the global markets leading to lower exports of various products like textile, engineering goods, leather, gems. 

Besides external factors, it said, ban in mining projects, delay in clearance of projects in power and steel sector, volatility in prices of raw material and shortage of power have impacted operations in infrastructure sectors, which were aggressively funded by the banks in the past.

 

From Zee News

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