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Banks’ Financials Likely To Face Pressure On Higher NPAs, Muted Income: RBI Report

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On December 29, the apex banker of the country said that banks' financials will likely come under pressure as slowly and gradually Covid 19 related relaxations are being lifted and pressure on the asset quality side is imminent.

Banks’ Financials To Face Pressure On Higher NPAs, Muted Income: RBI Report
 

In its Trend and Progress report, RBI said "With the moratorium coming to an end, the deadline for restructuring proposals is fast approaching and with the possible lifting of the asset quality standstill, banks' financials are likely to be impacted in terms of asset quality and future income".

Besides the report stated that anticipating higher delinquencies, banks have provided ambitious plans for shoring up their capital for complying with the regulatory requirements and to be lending -ready as and when demand for credit revives.

Amid Covid 19 challenges, the RBI announced 6-month moratorium on all term loans, thereby following it with a one-time loan restructuring proposal. The SC as an interim relief asked banks to not label any loan account as NPA that remained standard as on August 31 and even the centre has put on hold all fresh bankruptcy cases till March 2021.

"Going forward, banks will have to adapt and adjust to the rapidly evolving economic landscape due to these challenges and also the entry of niche players and emerging financial technologies," the RBI said. Further, the report highlighted that though the financial health of the banks improved on lower slippages and higher capital buffers and provisions, weak economic conditions augmented risk aversion and dragged down credit off-take, the RBI report said.]

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Read more about: rbi banks loan moratorium
Story first published: Tuesday, December 29, 2020, 21:41 [IST]
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