Banks’ NPL ratio will drop to 0.90 per cent by the end of the current financial year, according to market research firm Crisil.
In this regard, the statement issued by the organization states:
At present, the bad debt of banks is around 6 percent. It was 5 percent at the end of the current fiscal, down 0.9 percent.
In the next financial year, bad debt will further decline to 4 percent.
However, there is a risk of increasing non-performing loans in loans to the micro, small and medium enterprises (MSME) segment.
Total non-performing loans in the sector, which has been hit the hardest by the Corona crisis, may rise from 9.3 percent as on March 31 last year to 10 to 11 percent on March 31 next year.
However, as large companies are performing well, the ratio of bad loans in loans given to those companies will decline.
As on March 31, 2018, the bad debt of banks was 16 percent. That is the maximum rate of bad debt. It will fall to 2 percent in the current financial year.
The corporate sector accounts for more than half of the country’s lending. This will help in reducing the bad loan rate.
Also, the secured lending segment was only 59 percent of the total loans disbursed in 2017. It has now increased to 77 percent.
But at the same time, the unsecured lending segment declined from 17 percent to 7 percent.
Due to this, the bad loan provision of banks will fall drastically, the report said.