NPAs may remain within projections: RBI Governor Shaktikanta Das

The lockdown restrictions were relatively higher in South and some parts of central region,” said Rajat Kumar Singh-business head of MicroBanking and Rural Banking, Ujjivan Small Finance Bank.

By Ankur Mishra

Reserve Bank of India Governor Shaktikanta Das on Friday said that non-performing assets (NPAs) in the banking sector may remain within the range of projections made in the last financial stability report (FSR).

However, Das specified that final details 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 may rise to 13.5% by September 2021 in the baseline scenario.

“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 said in a press conference on Friday 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 further said.

In the policy statement, the RBI Governor also emphasised on building capital buffers and adequate provisioning for banks and NBFCs to mitigate the impact of Covid-19. Last week, RBI in its annual report, said 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 over 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 said.

PCR improved to 75.5% at end-December 2020 from 66.6% in March 2020. Similarly, the capital to risk-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 market by public and private sector banks, and retention of profits.

The central bank, in its annual report had, however, cautioned that asset quality of the banks needs to be closely monitored in the coming quarters.

The regulator had given the warning as the lenders will have to show a true picture of the bad loans after Supreme Court (SC) lifted interim stay 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 impact on borrowers. The Supreme Court had directed lenders to waive compound interest of the borrowers during the moratorium period.