The Reserve Bank of India (RBI) on Thursday said that total stressed advances of large borrowers increased by 2.4% between March and September 2017 and advances to large borrowers classified as special mention accounts-2 (SMA-2) also increased sharply by 56.5% during the same period. However, the share of large borrowers both in total bank loans as well as gross non-performing assets (NPAs) declined between March and September 2017, the central bank said in its Financial Stability Report (FSR). According to the RBI’s stress test, in the baseline scenario, gross NPAs of the banking sector may rise from 10.2% of gross advances in September 2017 to 10.8% in March 2018 and further to 11.1% by September 2018. It added that the overall risks to the banking sector remained elevated due to asset quality concerns. The RBI also pointed out that the overhang of liquidity conditions in the wake of demonetisation has led to unprecedented fund flows to both equity and debt mutual funds. “Foreign portfolio investment flows into the capital market also remained buoyant with a greater preference for debt,” it said.