Weak assets of Indian banks may shoot up to 14% by March 2021: S&P

The tough operating conditions could lead to a rise in non-performing loans (NPLs) and credit costs. It may also result in delay in recoveries for the banking system

Rating agency Standard and Poor’s (S&P) expects the weak assets of Indian banks to shoot up to 13-14 per cent of gross loans by March 2021 as heightened economic risks are set to affect their asset quality and financial performance. Its forecast is higher than the peak of 11.6 per cent witnessed in fiscal year 2018, and about 8.5 per cent estimated as on March 31, 2020.
 

The credit costs, which banks have to set aside as provision for bad loans, are likely to rise to about 3.7 per cent of gross loans from 2.9 per cent estimated for March