Indian banks' total gross non-performing assets (GNPAs)  may rise to 14.8 percent under a severe stress scenario by September 2021 vis a vis 7.5 percent in the year-ago period, the Reserve Bank of India (RBI) said in its Financial Stability Report released on January 11.

Under a baseline scenario, the GNPAs of banks may rise to 13.5 percent by September, the report said. The Central bank said these numbers were arrived at based on the macro stress tests incorporating the first advance estimates of gross domestic product (GDP) for 2020-21 released on January 7, 2021. “This highlights the need for proactive building up of adequate capital to withstand possible asset quality deterioration,” the RBI said.

As per the report, the capital to risk-weighted assets ratio of scheduled commercial banks improved to 15.8 percent in September 2020 from 14.7 percent in March 2020, while their GNPA ratio declined to 7.5 percent from 8.4 percent.  Likewise,  the provision coverage ratio improved to 72.4 percent from 66.2 percent over this period, the report said.

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