NPAs in shadow banking sector may touch 5-7% by March 2021, says Icra

NBFCs likely to face heightened pressure with NPAs touching 7-9.5%; HFCs will be better off with NPAs expected to touch 3.4-4.8%

Asset quality of shadow lenders is expected to deteriorate considerably in FY21 due to the disruption in economic activity caused by the spread of the deadly virus and the subsequent lockdown imposed to contain it. Rating agency Icra expects the non-performing assets (NPAs) of non-banks, including housing finance companies (HFCs) to touch 5-7 per cent by end of March 2021 from 3.3-3.4 per cent in March 2020, assuming a slippage of 5-10 per cent in the assets under management of the shadow banks.

It is expected that the NBFCs will face a heightened pressure on the asset quality with NPAs touching