INSUBCONTINENT EXCLUSIVE:
The rise in profitability that aided banks to improve their provisions has resulted in net non-performing assets (NPAs) to net advances
said.
Net NPAs were at similar levels back in March 2012
quarterly slippage ratio, which had been rising since December 2021, cooled off during Q2, 2022-23, with considerable improvement recorded
The provision coverage ratio, which has been increasing steadily since March 2021, has reached 71.5 per cent in September 2022.
However,
the write-offs to gross NPA ratio increased in the first half of 2022-23 on an annualised basis, after declining for two consecutive
trend down further to 4.9 per cent by September 2023
that banks are fully capable of absorbing macroeconomic shocks, even without any infusion of capital by stakeholders.
Under the baseline
scenario, the aggregate capital adequacy ratio (CAR) of 46 major banks is projected to slip from 15.8 per cent in September 2022 to 14.9 per
cent by September 2023.
Further, CAR may go down to 14 per cent in the medium stress scenario and to 13.1 per cent under the severe stress
scenario by September 2023, but it will still be above the minimum capital requirement, including capital conservation buffer (CCB)
of 9 per cent in the next one year, even in a severely stressed situation, although nine SCBs may fall short of the minimum capital
ratio of select banks will fall by 70 basis points to 12.1 per cent by September 2023 from 12.8 per cent in September 2022
Similarly, in a severely stressed macroeconomic environment, the aggregate CET1 capital ratio would deplete only by 210 basis points, which
are expected to fall to 4.9 per cent by September 2023 from the current 5 per cent as of September 2022
However, if the macroeconomic environment worsens to a medium or severe stress scenario, gross NPAs may rise to 5.8 per cent and 7.8 per
cent, respectively.
This is without taking the potential impact of stressed asset purchases by National Asset Reconstruction Company
Limited (NARCL) into account and under the assumption that there will be no reliefs from the central bank.
At the bank group level, gross
NPA ratios of PSBs may swell from 6.5 per cent in September 2022 to 9.4 per cent in September 2023, whereas it will go up from 3.3 per cent
to 5.8 per cent for private banks, and from 2.5 per cent to 4.1 per cent for foreign banks, under the severe stress scenario, the RBI said.
