Moratorium hides asset health of PSBs, helps banks post lower NPAs

The results of public sector banks (PSBs) for the quarter ended March 2020 (fourth quarter, or Q4) show an improvement in asset quality. On an aggregate basis, the average gross non-performing asset (NPA) ratio of eight listed PSBs, which have announced their Q4 numbers so far, has declined 132 basis points (bps) sequentially to 10.8 per cent. Independently, each of these banks has reported a decline in gross NPA, ranging between 15 bps and 396 bps (see table). On a year-on-year (YoY) basis, too, the average gross NPA ratio of these eight banks is down 115 bps.

Though these numbers