RBI Warns Gross NPAs of Banks May Escalate to 14.8% in September in Absence of Adequate Capital

-Moneylife.in

While highlighting the need for proactive building up of adequate capital for banks to withstand possible asset quality deterioration, the Reserve Bank of India (RBI) has warned that the gross non-performing assets (GNPAs) of scheduled commercial banks (SCBs) may escalate to 14.8% under a severe stress scenario.

In its financial stability report (FSR), the central bank says, "Macro stress tests incorporating the first advance estimates of gross domestic product (GDP) for 2020-21 released on 7 January 2021 indicate that the GNPA ratio of all SCBs may increase to 13.5% by September 2021 from 7.5% in September 2020 under the baseline scenario; the ratio may escalate to 14.8% under a severe stress scenario."

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