Bad loans of small finance banks may go up 70-80 bps by FY22-end

On an overall basis, ICRA expects some reduction in GNPAs in the second-half of FY22

The gross non–performing assets (GNPAs) of small finance banks (SFBs) is expected to go up by 70–80 basis points (bps) by the end of the current financial year (FY22) compared to FY21 levels, an assessment by rating agency ICRA has suggested.

SFBs had seen their asset quality deteriorate post the second wave of Covid-19, in April-May of 2021, when the GNPAs went up to 6.4 per cent as of quarter 2 (Q2) of FY22 from 5 per cent at the end of FY21. While the gradual ramp up in collections has helped, the performance of the restructured portfolio remains monitorable, the