With the expectation of reduced slippagges of 3-4 per cent, the GNPAs might increase to 9.8-10.3 per cent by March 31, 2021 from 8.5 per cent as on March 31, 2020
Abhijit Lele |
Last Updated at August 11, 2020 18:19 IST
With tighter rules for debt recast in place, around 5-8 per cent of overall loans may be restructured compared the 10-15 per cent of loans expected to come under the moratorium by September 2020, according to rating agency ICRA.
Reserve Bank of India has framed strict norms for loans to be eligible for restructuring, like considering only borrowers with dues upto 30 days as on March 01, 2020 for recast. Moreover, resolution plans will now be required to go through an independent credit assessment (ICA) and banks will have to make a higher upfront provisioning for restructured loans.
Anil Gupta, vice president – Financial Sector Ratings, ICRA said, “Of the estimated 10-15 per cent loans under moratorium, we estimate the slippages for FY2021 at 3-4 per cent of the overall loans of banks (largely the SMA1 and SMA 2 pool as on March 31, 2020). About 5-8 per cent could be restructured and the rest 2-3 per cent is likely to result in an increase in overdue categories’ loans,” Gupta said.
ICRA had earlier projected a slippage of 5.0-5.5 per cent for the banks during FY2021, driving an increase in Gross Non-performing Assets (NPAs) to 11.3-11.6 per cent by March 31, 2021.
With the expectation of reduced slippagges of 3-4 per cent, the GNPAs might increase to 9.8-10.3 per cent by March 31, 2021 from 8.5 per cent as on March 31, 2020.
A lower slippage will also reduce the capital requirements for the banks. The capital requirements for public sector banks could decline to Rs 20,000-55,500 from an earlier estimate of Rs 46,000-82,600 crore for FY2021.
Also for private banks, the capital requirement would decline to Rs 22,000-33,400 crore from Rs 25,000-48,300 crore. The private lenders, may however, raise capital higher than estimates as their capital raisings are for next 3 years of growth cycle, ICRA said.