Banks NPA ratio likely to fall to 5-5.55% by March 2024

 

As per RBI's latest Financial Stability Report, the gross non-performing assets (GNPA) declined to a six-year low of 5.9% in March 2022. The non-performing loans of banks are expected to decline to 5-5.5% of the total advances by March 2024.

The credit costs to stabilize at 1.5% for fiscal 2023 and further normalize to 1.3%, making credit costs comparable to those of other emerging markets and India's 15-year average.

With an economic pick-up, residual stress for these segments should start reducing; NPL (Non-Performing Loans) recoveries are likely to also gain momentum. This is a good sign for our country's economy.

The economic growth prospects should remain strong over the medium term, with GDP expanding 6.5-7% annually in the fiscal year 2024-2026.