Chandigarh: The Reserve Bank of India (RBI) has cautioned that bad loans of the banking system are expected to hit 11.22 per cent of the advances under a severe stress scenario.
The central bank also warned about the incipient signs of stress among medium and small units, notes a report in The Indian Express.
The Financial Stability Report (FSR) of the RBI said macro stress tests indicate that the gross non-performing asset (GNPA) ratio of banks may increase from 7.48 per cent in March 2021 to 9.80 per cent by March 2022 under the baseline scenario and to 11.22 per cent under a severe stress scenario.
On the domestic front, the ferocity of the second wave of COVID-19 has dented economic activity, but monetary, regulatory and fiscal policy measures have helped curtail the solvency risk of financial entities, stabilise markets, and maintain financial stability, according to the Financial Stability Report (FSR) of RBI.