Mumbai: The RBI on Thursday said PSU banks’ gross non-performing asset (GNPA) ratio may decline from 9.3 percent in March 2019 to 9.0 percent in March 2020, hinting at the reversal of the NPA cycle gripping the state lenders.
Underlining the strength of the banking sector while covering for the bad loans, it said "Provision coverage ratio (PCR) of all SCBs rose sharply to 60.6 percent in March 2019 from 52.4 percent in September 2018.
“The macro-stress tests for credit risk indicate that under the baseline scenario, SCBs’ gross non-performing asset (GNPA) ratio may decline from 9.3 percent in March 2019 to 9.0 percent in March 2020,” the central bank said in its latest FSR report.
Patting the PSU banks on their backs with credit growth posting near double-digit growth, capital adequacy improvement, a turnaround of NPA cycle and rise in provision coverage ratio of to cover NPAs and fall in gross NPA ratio, the RBI said credit growth is nearing double digits.
“Credit growth of scheduled commercial banks (SCBs) picked up, with public sector banks (PSBs) registering near double-digit growth. Capital adequacy of the SCBs improved after the recapitalization of PSBs,” the RBI said in the latest Financial Stability Report. With the bulk of the legacy non-performing assets (NPAs) already recognized in the banking books, the non-performing assets (NPA) cycle seems to have turned around, the central bank noted. (IANS)
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