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Bad loans to decline to 5.6-5.7% level by March 2023, says ICRA

The credit and other provisions are estimated to dip to 1.3-1.4 per cent of advances in FY23 as against an estimated 1.7-1.8 per cent in FY22

Topics
Bad loans | ICRA | NPAs

Abhijit Lele  |  Mumbai 


Lending, banks, credit, loans, cash, income, wage, earning
Photo: Bloomberg

The asset quality of the Indian banking system is set to improve further with its gross non-performing assets (NPAs) estimated to decline to 5.6-5.7 per cent by March 2023 from 6.2-6.3 per cent in March 2022, according to .

The will decline to 1.7-1.8 per cent by end of the current financial year (FY23) as against an estimate of 2 per cent by March 2022.

However, the rating agency added a caveat saying the performance of restructured loan book poses uncertainty to asset quality. The Russia-Ukraine conflict poses macro-economic challenges related to cost inflation, higher interest rates, and exchange rate volatility, which could pressurise asset quality, it added.

The credit and other provisions are estimated to dip to 1.3-1.4 per cent of advances in FY23 as against an estimated 1.7-1.8 per cent in FY22, said Anil Gupta, vice president, .

expects the outlook for to be ‘stable’ in FY23, based on continued improvement in earnings driven by improved credit growth of 8.9-10.2 per cent in FY23 (8.3 per cent for FY22 & 5.5 per cent in FY21) and a decline in credit provisions.

Banking credit growth would come from the non-food segment which continues to be driven by retail and MSME segments, and partially by co-lending arrangements with non-banking companies (NBFCs).

The pace of deposit mobilisation is expected to slow down to 7.3-7.9 per cent in FY2023 (8.3 per cent in FY22e & 11.4 per cent in FY21).

First Published: Tue, April 05 2022. 12:41 IST

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