Gross NPAs in the banking sector will come down to five percent by the end of March

Mumbai: By the end of the current financial year, gross non-performing assets (NPAs) of Indian banks are expected to decline by 90 basis points to five percent. Apart from this, a report by CRISIL has expressed an expectation that the gross NPA will further decrease to four percent by the end of the financial year 2024.

Following the post-Corona economic recovery and strong growth in credit, the main indicator of asset quality of banks, i.e. NPAs, is likely to see improvement. In the fortnight ended August 26 of the current financial year, credit in the banking sector has seen a year-on-year growth of 15.50 percent, while deposits have seen a growth of 9.50 percent. A percentage increase has been observed.

The banking sector will also benefit from the proposal to sell the weak assets of banks to the National Asset Reconstruction Company Ltd.

Corporate asset quality is also reflecting a steady improvement in key indicators such as credit quality of bank exposures. A study of large loans by banks has shown that the share of loans with high security has increased to 77 percent by the end of March 2022 from 59 percent at the end of the financial year 2017.

Asset quality has also improved due to strength in risk management and underwriting. Meanwhile, the retail segment has remained resilient and gross NPA is expected to remain rangebound at 1.80 to 2 percent in the medium term, according to CRISIL.