The gross non- performing (GNPA) ratio of scheduled commercial banks (SCBs) fell to a seven-year low of 5% in September 2022, the RBI said in its financial stability report (FSR) on December 29, 2022. The net non-performing assets (NNPA) ratio stood at a 10-year low of 1.3%, wherein private banks NNPA ratio was below 1%.
The PSBs’ GNPA ratio of 6.5% in Sep’22 may fall to 6.4% by Sep’23 under the baseline scenario (7.1% earlier envisaged for Mar’23). For PVBs, the share of bad loans may fall from 3.3% in Sep’22 to 3.1% in Sep’23 and for FBs, it is estimated to decline from 2.5% in Sep’22 to 2.2% in Sep’23 under baseline scenario.
GNPA ratio of SCBs continued to decline and stood at a seven-year low of 5.0% in Sep’22. The NNPA ratio stood at a 10-year low of 1.3%, wherein private banks NNPA ratio was below 1%. The quarterly slippage ratio, which had been rising since Dec’21, cooled off during Q2FY23, with considerable improvement recorded by PSU banks. The provisioning coverage ratio (PCR) has been increasing steadily since Mar’21, and reached 71.5% in Sep’22. The PCRs of private banks and foreign banks exceeded 75%. Meanwhile, the write-offs to GNPA ratio increased during H1FY23 on an annualised basis, after declining for two consecutive years.
SCBs’ asset quality continued to improve across most sectors. The share of large borrowers in gross advances of SCBs has been on a declining path and their share in total GNPA has come down to 62.2% in Sep’22 from 75.6% two years earlier. The GNPA ratio of large borrowers continued to improve and stood at 6.4% in Sep’22.
SCBs’ y-o-y credit growth, which started picking up during H2FY22, sustained its momentum and gathered pace to touch a decadal high of 17.4% as on 16th Dec’22. The increase has been broad-based across geography, economic sectors, population groups, organisations, type of accounts and bank groups.