InvestorQ : Will the banks see fresh asset quality challenges once the lockdown is lifted? I am talking of PSU and private banks like SBI, BOB, HDFC Bank, Axis and ICICI Bank?
Katherine Gonsalves made post

Will the banks see fresh asset quality challenges once the lockdown is lifted? I am talking of PSU and private banks like SBI, BOB, HDFC Bank, Axis and ICICI Bank?

image
Rutuja Nigam answered.
5 months ago
Follow

The Rs.21,00,000 crore stimulus announced by the government will be largely in the form of bank lending and that could put pressure on bank NPAs in the coming quarters. In fact, analysts warn that the gross NPAs could spike by as much as 600 basis points from 9% o 15% in the coming year. The stimulus measures include extension of the 90-day moratorium on recognition of impaired loans to 180 days, in addition to several relaxations in bank lending limits, including allowing banks to fund interest on working capital loans. These are likely to put a huge burden on state-run banks which already have very weak balance sheets. In addition, private banks are likely to face pressure on the consumer and retail loans front. With the IBC on hold for one year, these delays in resolution will only exacerbate future losses.

23 Views