Budget Byte: Banks’ non-performing assets likely to bulge in 2021


bear the brunt of Covid-19

The proportion of loans under moratorium rose for only one segment — Micro, Small and Medium Enterprises (MSMEs) — from April to August 2020. From 65 per cent in April, it went up to 69 per cent. Corporate and individual loans under moratorium eased a bit.

Banks’ set to bulge in 2021

Once the moratorium lifts, banks’ NPAs are set to rise. The Reserve Bank of India’s Financial Stability Report has stated that in the baseline scenario, NPAs may rise to 13.5% of advances at the end of September 2021. In recent years, actual NPAs have consistently been lower than the projection. The Budget has to focus strongly on recapitalisation of public sector banks.


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