Rating agencies have warned the struggling banking sector on its deteriorating performance, especially the weak capitalisation, financial performance and rising non-performing assets (NPAs). Crisil has estimated the bad loan ratio to rise by 1 percentage point to 10.5 per cent by March 2018. These are unlikely to stress bank balance sheets the way large corporate NPAs did, said Gurpreet Chhatwal, President, CRISIL Ratings. Banks are better placed here because exposures are spread across industries and not as chunky as corporate loans.
Crisil Ratings today said banks have only recognised two-thirds of their stressed loans as non-performing assets, and estimated the bad loan ratio to rise by 1 percentage point to 10.5 per cent by March 2018. The 9.5 per cent NPA figure for March 2017 includes only two-thirds of the overall stressed assets. With the majority of stressed assets now recognised as NPAs, rest of the corporate loan portfolio of banks can be expected to perform better over the medium-term, Crisil president Gurpreet Chhatwal said.