The Associated Chambers of Commerce and Industry of India (ASSOCHAM) and Crisil, an Indian analytical company, in their joint report noted that the gross non-performing assets (GNPAs) of banks are expected to cross Rs 10 lakh crore by March 2022. The NPAs are expected to rise to 8.5-9 percent by March 2022, driven by slippages in retail, micro, small and medium enterprise (MSME) accounts, besides some restructured assets, according to the study titled, 'Reinforcing the code,' conducted by the ASSOCHAM jointly with credit rating agency Crisil.
"The effectiveness of the Insolvency and Bankruptcy Code (IBC) will be tested by the potential spike in NPAs as the standstill on initiation of fresh insolvency cases for a year ended in March 2021 and as most of the pandemic-induced policies or measures are unlikely to be continued," said the study.
The ASSOCHAM-Crisil study also noted that the expected increase in GNPAs of both banks and non-banks this fiscal because of the pandemic will provide an opportunity for players in the stressed assets market through resolution via various routes, with IBC likely to be the most preferred. It said that the GNPAs of banks have declined from the peak seen in March 2018 and were lower as of March 2021 vis-a-vis March 2020 on account of supportive measures, including the six month debt moratorium, emergency credit line guarantee scheme (ECLGS) loans and restructuring measures.