Gross non-performing assets (GNPAs) of banks is expected to improve 90 basis points (bps) to about 5 per cent this fiscal, and another 100 bps to a decadal low of about 4 per cent by March 31, 2024, riding on post-pandemic economic recovery and higher credit growth, according to CRISIL ratings.
CRISIL observed that the asset quality of the banking sector will also benefit from the proposed sale of NPAs to the National Asset Reconstruction Company (NARCL).
“That said, not all segments will perform equally well. The biggest improvement will be in the corporate segment, where gross NPAs is seen falling below 2 per cent next fiscal from a peak of about 16 per cent as on March 31, 2018,” the agency said in a statement.
Krishnan Sitaraman, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings, noted that the steady improvement in corporate asset quality is reflected in the credit quality of bank exposures.