Indian Banks NPA – ‘Indiscriminate’ Loans Being Distributed During The Corona Period, Banks’ NPA Will Be At Peak After 2022-23 – Global rating agency Fitch Ratings says that after the financial year 2022-23, the NPAs of banks will reach their peak. Know what could be the reason for this…
Indian Banks NPA – ‘Indiscriminate’ Loans Being Distributed During The Corona Period, Banks’ NPA Will Be At Peak After 2022-23
Fitch Ratings says that in the financial year 2020-21, the proportion of bad loans in the total loan disbursed by banks was 7.5%. This is a better than expected performance of Indian banks. The main reason for this is the reduction of new bad loans and the second is the write-off of bad loans on a large scale.
Fitch Ratings has said this in its report ‘Indian Banks 2021 Report Card’. He says that during the Corona period, the government has given many reliefs for the affected areas like MSME. In this, the government has also brought a guarantee scheme to give them loans. The identification of asset quality risks or problems has been postponed during large scale lending to MSMEs.
Finance Minister Nirmala Sitharaman announced a relief package to overcome Covid and revive the economy. The size of this package announced on June 28 is Rs 6.29 lakh crore, which includes an additional Rs 1.5 lakh crore for the credit guarantee scheme.
However, Fitch Ratings says that the performance of private banks in 2020-21 has been better than public sector banks. This has made a positive impact on the banking system. But keeping asset quality risks aside has added to the pressure.
Fitch Ratings estimates the way banks are disbursing loans keeping risk identification aside. With this, their NPA can reach its peak after 2022-23. Fitch has already reduced the country’s economic growth forecast for 2021-22.