MSME bad loans may rise to double dight levels this fiscal: CRISIL

Mumbai, May 27 (KNN) According to an ASSOCHAM-CRISIL report, bad loans in MSME sector could rise to double digit levels in March 2024.

But for overall bad loans of Indian banks will decline by 100 basis points during the current financial year, said the report. 

It will bringing down gross non-performing assets (NPAs) to below 4 per cent by March 2024.

The report suggests that the loan books of banks in the last two years, which have been improving in the previous two years, will improve further during the current financial year. 

The ongoing economic recovery post-pandemic and increased credit growth are the driving factors behind this improvement.

The study expects substantial progress in the corporate sector, where the gross NPAs are predicted to fall below two per cent in the upcoming fiscal year. 

This is a significant improvement from the peak of approximately 16 per cent recorded as of March 31, 2018.

The report credits this positive development to the banks' diligent efforts in cleaning up their books in recent years and their reinforced risk management and underwriting practices, which have led to a preference for borrowers with stronger credit profiles. 

The study further emphasizes that corporate asset quality has consistently improved, as evident from key indicators such as the credit quality of bank exposures.

Deepak Sood, Secretary General of ASSOCHAM, expressed confidence in the robustness of the banking sector, even in the face of ongoing global challenges. 

He stated, “The twin balance sheet problem has been largely resolved, leading to a significant increase in credit growth. Our banking sector remains resilient.”

However, the study also highlights concerns in the MSME segment, which endured the most severe impact during the pandemic.   (KNN Bureau)