MUMBAI: The country’s bad debt is likely to reach its lowest level in a decade in the next financial year, according to reports. According to the Assocham-Crusil rating study, the NPL ratio of Indian banks will decrease by 90 basis points to below 5%.
According to the report, the post-Covid economic boom and higher credit growth are contributing to the decline in bad loans.
The most significant change was reported from the corporate sector. The bad debt ratio in the corporate loan segment was 16 percent in 2018. But in the next financial year, it will reach less than two percent.
These are the other important reasons for the reduction of bad debts. Banks cleaning up their balance sheets led to a reduction in bad loans. Also the increased focus on credit profiles and improvement in asset quality of corporates benefited.
But the study also indicates that bad debt situation in MSME sector is not so good. The study found that bad debt in the MSME sector, which faced the most crisis during the Kovid period, will increase from 9.3 percent in March 2022 to 10-11 percent in March 2024.
