The Indian banking system’s stock of dud assets will further reduce to up to 8 per cent level by March 2020, but the NBFCs may continue to face challenges, domestic ratings agency Crisil said.
The gross non performing assets (NPAs) for the system will come down to 8-8.5 per cent by March from the peak of 11.5 per cent in March 2018 as fresh accretion through slippages gets slower and also with big ticket resolutions, it said.
The system has been afflicted by the scourge of high NPAs for nearly five years now, which has led to networth erosion and also led to discovery of scams in the sector.
The agency’s analysts said they are also including potential reverses from the financial sector companies which the banking system is staring at present in their NPA estimates.
Crisil’s Somasekhar Vemuri said the banking system’s credit growth will be stable at over 12 per cent, on Government’s recapitalisation efforts for the state-run lenders and also the aggressive play by private sector ones, who will grow faster than the system.
The level of NPAs the banking system has at the end of the year will also be a final credit growth number they notch up because of the denominator effect, he said.