NPA rises by 450%

CRISIL projects Credit Growth Dent in FY19

Share:

After the Reserve Bank of India tightened the NPA norms in Feb 2018, CRISIL – the rating agency, alarmed about a peak in impaired assets for the new fiscal year 2018-19. The agency came up with the warning based on the current probes against recent fraudulent bankers. CRISIL said that new rules for NPA might increase bad assets for March 2018, but may rise again by the middle of 2018-19. The agency addressed the coming year as a ‘year of reckoning’ for the banking system and said that the rise in bad assets will require time to settle down.  

Somasekhar Vemuri, senior director, CRISIL revealed in a conference call that they expect the gross NPAs to hit a peak of 11.5 percent during the new fiscal year. However, it is expected to slowly come down to 10.3 percent towards the end of the year (i.e. March 2019).

The Senior Director added that the current frauds including the Nirav Modi scam and allegations of quid pro-quo at ICICI Bank could probably be major obstructions in the way of main credit growth functions. These fraudulent activities have also affected the possible 11 percent credit growth in the banking system for FY19. Referring to the corporate credit growth, Somasekhar said that it will not be very high as they depend largely on working capital loans.

Share:

Leave a Reply

Your email address will not be published. Required fields are marked *