Bank asset quality may suffer as impact of relief measures dwindles: Icra

Rating agency has estimated that gross NPAs (excluding write-offs) will rise to 9.6-9.7% by March 31, 2021 and 9.9-10.2% by March 31, 2022 from 8.6% as of March 31, 2020

The headline pro forma gross non-performing assets (NPAs) and net NPAs reported by banks do not reflect the underlying stress on the asset quality of banks as the quantum of loans in the overdue categories has increased post the moratorium period and this will lead to a rise in non-performing assets of the banks.

Rating agency Icra expects asset quality pressure for banks to resurface after the impact of the relief measures by the government and the regulator wanes off. It has estimated that the gross NPAs (excluding write-offs) will rise to 9.6-9.7 per cent by March 31, 2021 and