Brace for selective interest in stressed assets

With looming uncertainty, investors will be very selective, cautious and careful in allocating funds towards this asset class

We are now about two months short of completing a full year of working from home. One hadn’t imagined in March 2020 that the impact of Covid-19 would be so severe and influence the way we work. The downturn has put further stress on banks, which have been reeling under non-performing loan assets (NPAs) for many years now.

The recent forecast from the Reserve Bank of India projects a base-case scenario of NPAs at 13 per cent. With meaningful credit growth unlikely in the near future and weak capital adequacy ratios, banks — especially public-sector banks — are heavily dependent