Gross non performing assets (GNPAs) of banks may rise from 6.9 per cent in September 2021 to 8.1 per cent by September 2022 under the baseline scenario, while under the severe stress scenario they may rise to 9.5 per cent.
This has been revealed by the financial stability report of the Reserve Bank of India (RBI).
However the report also said that scheduled commercial banks would have sufficient capital, both at the aggregate and individual levels, even under stress conditions.
It further said that emerging signs of stress in micro, small and medium enterprises (MSME) and also in the micro finance segment call for close monitoring of these portfolios in the future.
The RBI report noted that the global economic recovery has been losing momentum in the second half of 2021 mainly due to the resurfacing of Coronavirus infections and the new variant Omicron.
Also supply disruptions and bottlenecks, elevated inflationary levels and shifts in monetary policy stances and actions across advanced economies as well as emerging market economies, too have been factors behind sluggish economic recovery, the RBI report said further.
On the domestic front however, progress in vaccination has enabled the recovery to regain traction after the debilitating second wave of the pandemic, notwithstanding signs of slowing pace more recently, it said, adding that the corporate sector is gaining strength and bank credit growth is improving.
The capital to risk-weighted assets ratio (CRAR) of scheduled commercial banks rose to a new peak of 16.6 per cent and their provisioning coverage ratio (PCR) stood at 68.1 per cent in September 2021.