MUMBAI: Indian banks are expected to restructure lending to fewer lenders than previously expected, with 2,5-4.5% of the current development, which could return to normal, Icra said on Monday.
It is claimed that the loan repayments are a lot lower than previously expected, supported by sharper development than expected in economic activities and asset support through an emergency credit line guarantee system. Similarly, Icra reviewed estimates of a decrease in 2.5-4.5% of progress compared to 5-8%, previously estimated.
Anil Gupta, chief financial adviser, Icra said, in anticipation of sustainable collection and small reconstruction, asset quality is expected to improve in terms of non-performing assets (NPA) declining to 2.4-2.6% by March 2022.
Icra expects loan offers to decline to 1.8-2.4% development during FY22 from 2.2-3.1% to FY21 and 3.1% to FY20, which will lead to improved bank equity (RoE) returns. . It also expects public sector banks to break even after six consecutive years (FY16-FY21) losses and make a return of 0.0-5.4% of FY 2022.
The RoE of private banks is also projected to improve to 9.5-10.5% in FY 2022, he added.
According to the rating agency, the quality of the goods is high quality and as a result, the provision of loans can reduce the best interest rates for banks and give impetus to lenders and renew their lending decisions.
Low-interest rates, improved business value, better job opportunities, and higher income levels could also boost demand for next year’s loans, it said. However, with the suspension of the loan repayments over and awaiting the Supreme Court’s final decision, the major NPAs and NPAs in all banks are likely to increase in the near future to 10.1-10.6% and 3.1-3.2%, respectively, by March 2021.
At the moment, the monetary position of major private banks is strong and can withstand the pressure of asset quality after these banks raised ₹ 54,400 crores of money in the first nine months of FY21.
With rising inflation and improved profit prospects, Icra said, banks have been well-positioned to take advantage of calling options on their 26,000 crore AT-1 bond crumbs due to FY22 and FY23 without significant impact on their capital. The rating agency expects large amounts of private banks to be limited to a few medium and small private banks below ₹ 10,000 crores up to FY22.
Government banks have to raise more additional funding to the tune of Rs. The ability of public banks to raise funds for the market will be crucial in reducing the government’s burden of housing reform next year.