RBI warns of bad loan spike if Omicron triggers economic disruption

The Reserve Bank of India has warned in its latest financial stability report about a possible spike in bad loans if the Omicron variant of Covid-19 leads to major economic disruption.

Gross bad loans of banks may rise from 6.9 per cent in September 2021 to 8.1-9.5 per cent by September 2022 if the Omicron variant strikes the economy hard, as per the financial stability report of the Reserve Bank released on Wednesday.

The report also said that the rising stress level in the retail loan portfolio of banks -- the mainstay of bank credit for many years now -- was led by home loans, which grew in double-digits so far this fiscal.