‘Bank NPAs set to rise, deposit growth outpacing credit flow’
Updated:
Updated:
‘Expansion in credit in FY21 was the lowest in four years’
Share Article
‘Expansion in credit in FY21 was the lowest in four years’
Gross non-performing asset (GNPA) ratios of scheduled commercial banks (SCBs) are expected to shoot up in the coming quarters, according to data compiled by BCT Digital. This is despite the regulatory interventions to provide relief to both borrowers and lenders in the wake of the pandemic.
The GNPA for the banking system was at 7.5% in September 2020, an improvement from pre-pandemic levels, and coming after the asset quality review mandated by the regulator. This number is expected to shoot up to 13.5% in a base-case scenario and 14.8% in an extreme scenario by September 2021 as per RBI’s assessment in the latest Financial Stability Report (FSR), said Jaya Vaidhyanathan, CEO of BCT Digital, which helps banks manage risk.
Lockdown impact on NBFCs’ asset quality to be evident gradually: RBI
May 17, 2021
NBFCs continued to disburse credit despite Covid disruptions - PTI×
Incremental credit flows to the retail sector continued to increase
As Non-Banking Financial Companies (NBFCs) have continued to disburse credit despite the pandemic, the impact of the lockdown will be evident on their asset quality gradually, said an article in the RBI’s monthly bulletin.
“NBFCs continued to disburse credit despite disruptions caused by the pandemic, albeit at a slower pace,” said the article titled
‘Performance of NBFCs during the Pandemic: A Snapshot’.
Credit performance
Incremental credit flows (on year-on-year basis) to the retail sector continued to increase in the second and third quarter of 2020-21, but at a slower pace, while services sector saw marginal increase in the third quarter last fiscal, wherein vehicle loans, gold loans, transport and tourism were the beneficial segments.
Private sector lender IDBI Bank on Monday posted 278 per cent year-on-year rise in net profit at Rs 512 crore for the foruth quarter ended March 2021 (Q4FY21) on robust growth in net interest income. The profit stood at Rs 135 crore in fourth quarter ended March 2020 ( Q4Fy20). Sequentially its net profit was up 35 per cent from Rs 378 crore in quarter ended December 2021 (Q3FY21). For FY21, net profit was Rs 1,3459 crore as against net loss of Rs 12,887 crore in FY20. Its stock was trading 2.97 per cent at Rs 36.35 per share on BSE. The Net Interest Income (NII) improved by 38 per cent for Q4FY21 to Rs 3,240 crore from Rs 2,356 crore for Q4FY20. Sequentially NII was up by 79 per cent over Rs 1,810 crore in Q3FY21.
But he is confident that corporate credit will pick up on the back of economic revival and pick up in economic activity. The bank hopes that its credit growth to move into double-digits in the second quarter of FY22 as corporate spending picks pace. I am quite confident that the infrastructure outlay announced in the budget will go a long way to build up demand. which will lead to the creation of more capacity. In due course, we will see more term loan requests. We will probably see more people approaching the market to raise equity and debt, according to Khara.