Asset quality in banking sector may improve in 2020, show RBI stress tests

PSBs were found to be severely impacted, with the CAR of 19 of the 21 PSBs likely to go down below 9 per cent in case of such a shock, said the RBI

The quality of assets in the banking sector may improve in 2020, show stress tests conducted by the Reserve Bank of India (RBI).

In a baseline scenario, the gross non-performing assets (NPA) ratio of all scheduled commercial banks may come down from 9.3 per cent in December 2019 to 9 per cent by March 2019, said the RBI’s Financial Stability Report (FSR), released on Thursday.

The asset quality of public sector banks (PSBs), which have the highest concentration of NPAs, may improve from 12.6 per cent in March 2019. PSBs’ gross NPA ratio may decline to 12 per cent by