The non-performing assets (NPA) situation of the Indian banking system as represented by 23 banks — nine public sector banks (PSBs) and 14 private sector banks (PvBs) — that have declared results so far indicates a gradual improvement in the NPA ratio in September 2021, according to an assessment by CARE Ratings.

The Gross NPA (GNPA) ratio of the aforementioned banks has improved to 6.97 per cent as at September-end 2021 against 7.32 per cent as at June-end 2021 and 7.36 per cent as at September-end 2020, the credit rating agency said.

In absolute terms, the GNPA of the banks as at September-end 2021 was at ₹4,53,145 crore (₹4,40,124 crore as at September-end 2020) in a gross advance of ₹64,98,609 crore (₹59,82,606 crore).

Barring State Bank of India, Bank of Baroda and Union Bank of India, most of the other large banks have announced their second quarter financial results, CARE Ratings said.

Improving ratio

The Gross NPA (GNPA) ratio of PSBs has improved to 11.52 per cent as at September-end 2021 against 11.94 per cent as at June-end 2021 and 12.32 per cent as at September-end 2020, according to the agency.

The Gross NPA (GNPA) ratio of PvBs has improved to 3.94 per cent as at September-end 2021 against 4.16 per cent as at June-end 2021 and 3.82 per cent as at September-end 2020.

According to the Reserve Bank of India’s latest Financial Stability Report (July 2021), macro stress tests indicate that the GNPA ratio of scheduled commercial banks (SCBs) may increase from 7.48 per cent in March 2021 to 9.80 per cent by March 2022 under the baseline scenario; and to 11.22 per cent under a severe stress scenario, although SCBs have sufficient capital, both at the aggregate and individual level, even under stress.

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