Reserve Bank Of India: Npa Of Banks May Increase By One And A Half Times - Npa Consultants

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According to a survey, the NPA of banks may increase by one and half times in the coming months. It is certainly a matter that everyone should be concerned about. Already the situation of npa in india is under tremendous stress and the return of COVID-19 is terrifying people with the possibility of lockdown.

We saw that the banking sector has seen a surge in bad loans last year. Still, there are thousands of npa legal matters pending in the tribunal. If we see such a massive number of fresh NPA cases in the coming two quarters, then the situation is going to be out of control.

The figures declared by the FICCI-IBA survey conducted between July and December 2020 are horrifying. The impact of the situation will be visible by the end of this year. It was quite a comprehensive survey that involved twenty banks from the private and public sectors. Some foreign banks that operate in India also took part in the survey.

And according to the responses submitted by some of the participants, there was no decline in the NPA cases during the last six months of 2020. It means that npa in india was consistently severe ...
... during and post-lockdown period. Though, some banks admitted that the second half of 2020 was “somewhat better” than the first half. It means, it was not consistent across all banks.

The decline of NPA in some cases may be due to some localized factors. All of the participants feel that the NPA will increase more than 10 percent in the first six months of 2021.

The looming bad loan crisis will hit hard

With such a sharp rise, NPA is going to hit the Indian economy hard, there is no doubt about it. And the heat can be felt in 2022. Under the baseline stress scenario, the gross NPA will cross the 13.5 percent mark by September this year. It is quite straightforward that npa legal matters will also increase in the same ratio.

And the bad news is that sectors that have already seen a bad time due to COVID-19 will be the sufferers, e.g., tourism and hospitality, aviation, restaurant, and MSME. There will be fewer opportunities of making money, but the operational expenses will go higher due to less turnover of customers.

Banks are receiving applications for one-time restructuring of loans after the announcement of the scheme by RBI.

Looking at all these aspects, npa in india is a serious matter. Collective efforts are required to overcome the situation.
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