RBI’s Financial Stability Report – Well Placed To Weather Credit Shocks: ICICI Securities
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ICICI Securities Report
We draw the following inferences from the Reserve Bank of India’s Financial Stability Report – December 2021:
Current asset quality position and stress test suggest scheduled commercial banks have emerged more robust and are generally well placed to weather credit-related shocks. Stress test for united commercial banks and non banking financial companies present a more varied picture.
Gross non-performing asset ratio of all SCBs may increase from 6.9% in September 2021 to 8.1% by Sep-2022 under the baseline scenario and further to 9.5% under severe stress.
Public sector banks’ GNPA ratio of 8.8% in Sep-21 may deteriorate to 10.5% by Sep-22 under the baseline scenario.
For private banks, the share of bad loans may rise from 4.6% to 5.2%, and for foreign banks, it is estimated to increase from 3.2% to 3.9% over the same period.
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