Banks' Bad Debt To Rise Sharply Amid COVID-19 Pandemic: RBI Report

The impact of the COVID-19 pandemic is likely to push up the gross non-performing assets in the Indian banking system to at least 12.5 per cent by March 2021, from 8.5 per cent in March 2020, a report from the Financial Stability and Development Council said on Friday.

"It may escalate to 14.7 per cent under a very severely stressed scenario," the council's Financial Stability Report released by the Reserve Bank of India said. Governor Shaktikanta Das, in his foreword to the report, highlighted the uncertainty to economic growth, but said once the post-pandemic phase was reached the focus would be on calibrated unwinding of regulatory and other dispensations.

"The challenges that lie ahead have to be addressed with the overarching objective of preserving long-term stability of the financial system, which is critical for nurturing the recovery," he added.