GNPA ratio of SCBs falls to seven-year low of 5.0%: Economic Survey

The recovery rate for the SCBs through the Insolvency and Bankruptcy Code (IBC) was highest in FY22 compared to other channels, the survey noted

The Economic Survey tabled by Union Finance Minister Nirmala Sitharaman on January 31 has noted that the Gross Non-performing Advances (GNPA) of the Scheduled Commercial Banks (SCBs) has fallen to a seven-year low of 5.0% in the year 2022.

The survey further said the Capital-to-Risk Weighted Assets Ratio (CRAR) remains healthy at 16.0 and well above the regulatory requirement of 11.5. The health of NBFCs has continued to improve as well, the survey has noted.

The recovery rate for the SCBs through the Insolvency and Bankruptcy Code (IBC) was highest in FY22 compared to other channels.

The GNPA ratio decreased from 8.2% in March 2020 to a seven-year low of 5.0% in September 2022, while Net Non-Performing Assets (NNPA) have dropped to a ten-year low of 1.3% of total assets, the survey noted. Lower slippages and the reduction in outstanding GNPAs through recoveries, upgrades, and write-offs led to this decrease, it stated.

It noted lower GNPAs, combined with high provisions accumulated in recent years, contributed to a decline in NNPA.

According to the survey, there was a broad-based improvement in the GNPA ratio in the industrial sector, though it remained elevated for gems and jewellery and construction sub-sectors. Going ahead, as per the baseline scenario of the RBI’s stress testing framework, the declining tendency in the GNPA ratio is likely to continue and is projected to drop further to 4.9% in March 2023.