MUMBAI: Contrary to expectations that there would be an increase in bad loans in the banking sector due to Covid-19, the ratio of non-performing assets (NPAs) to total loans has improved during the quarter ended in September 2020. According to a report by Care Ratings, the ratio of gross NPAs of banks has fallen to 7.7percent from 8.2percent in June and 7.9percent in March 2020.
At the end of the second quarter, public sector banks, or PSBs (including IDBI Bank), reported their gross NPA ratio at 9.7percent compared to 10.2percent in June 2020. This is the first time in several quarters that PSBs are reporting single-digit gross NPAs. Private sector banks too reported a decline in NPA ratio at 5percent from 5.5percent, report agencies.“The moratorium provided till August had provided space in terms of recognition of NPAs, which could have improved the ratios.