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Banking bad debts could double in Coronavirus crisis

India expects bad debts of its banks could double after the Coronavirus crisis brought to the economy a sudden halt. Indian banks are already grappling with 9.35 trillion rupees ($123 billion) of sourced loans, which was equivalent to about 9.1% of their total assets at the end of September 2019. The Government of India considers that NPA’s of the banks could double to 18-20% by the end of the fiscal year, as 20-25% of outstanding loans face a risk of default. A fresh increase in bad debts could hit the credit growth and could delay India’s recovery from the pandemic of Coronavirus. It is also expected that banks could report an increase in the amount of NPA’s from what we’ve seen in earlier quarters. Thus, the bad debts of the banks in India are expected to be   doubled after the pandemic of Coronavirus gets over. Banks could also report an increase in the amount of Non-Performing Assets as seen in earlier quarters of the year 2020. An increase in the bad debts could also impact the credit growth of the market and could cause delay in recovery of bad debts from the effect of the Coronavirus pandemic.

 

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