Covid-19 pandemic may set back banks' recovery by years, says S&P

The Covid-19 pandemic may set back the recovery of banks by years, which would hit credit flows and, ultimately, the economy, Standard and Poor’s (S&P) said on Tuesday.

It also expects non-performing assets (NPAs) to hit a fresh high this year. “In base case, we expect the NPAs to shoot up to 13-14 per cent of total loans in the fiscal year ending March 31, 2021 (FY21), compared to an estimated 8.5 per cent in the previous fiscal year,” said the rating agency in its report titled ‘Covid and Indian banks: One step forward, two steps back’ released on Tuesday.