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

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 ICRA.

The NPAs 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