InvestorQ : With India in a shutdown and factories closed, do you think that the problem of bank NPAs will again come back? I hold SBI and BOB in my portfolio?
Debbie Mascarenhas made post

With India in a shutdown and factories closed, do you think that the problem of bank NPAs will again come back? I hold SBI and BOB in my portfolio?

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Crowny Pinto answered.
10 months ago
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In fact, that is a risk that is already being highlighted by rating agencies and by analysts. Rating agency CARE has warned that the Coronavirus could lead to a sharp increase in the level of NPAs of Indian banks. This is done on the basis of a study of 38 banks where CARE has concluded that most of the banks will need to raise additional capital in the coming quarters in the light of COVID-19. This is unfortunate because NPAs have come down in the last 18 months from 11.35% to 9.31%. This was also aided by robust recovery of Rs.3.59 trillion via the IBC route. Shutdowns mean that the production and consumption have largely grinded to a halt. Therefore, a weak economy, shutdowns and ageing provisions could worsen NPAs for banks. PSU banks could bear the brunt but you can also expect pressure on the consumer loans given by private banks.

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