Amid reports of the RBI mulling restructuring of loans, global rating agency S&P on Tuesday said that a loan recast will only defer NPAs recognition and not solve the problem.
The agency also said operational outages and the recession because of the pandemic will have a deeper and longer impact on lenders than previously assumed, and estimated the gross non-performing assets ratio to rise up to 14 per cent in FY2021 from the 8.5 per cent in FY2020. “The COVID-19 pandemic may set back the recovery of India’s banking sector by years, which could hit credit flows and, ultimately, the economy,” the agency said.