Indian banks may see bad loans double despite signs of an improvement in the economic impact of the COVID-19 pandemic, a report from the Financial Stability and Development Council said on Monday.
The gross Non-Performing Assets of banks may increase from 7.5% in September 2020 to 14.8% under a severe stress scenario. Even under a baseline scenario it may rise to 13.5% by September 2021, the council said.
“It is assessed that the worst is behind us, though the recovery path remains uncertain,” the council’s Financial Stability Report released by the Reserve Bank of India said.
The council is an umbrella group of regulators and releases the FSR report twice yearly to give a detailed overview on the health of the Indian financial system.
RBI Governor Shaktikanta Das said in his foreword to the report that maintaining the financial health