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Bad loans may hit 22-year high by Sept, RBI stress tests show -Shayan Ghosh and Gopika Gopakumar

-Livemint.com

The gross bad loan ratio of banks which stood at 7.5% as of 30 September, could almost double to 14.8% under a severe stress scenario, RBI warns

Indian banks’ bad loan ratio could rise to 13.5% under the baseline stress scenario by September, the highest in more than 22 years, posing a risk to the broader economy, the Reserve Bank of India (RBI) said.

The gross bad loan ratio of banks which stood at 7.5% as of 30 September, could almost double to 14.8% under a severe stress scenario, RBI warned on Monday in its semi-annual Financial Stability Report (FSR). Under the severe stress scenario, RBI has assumed a 7.6% economic contraction in the six months to 31 March and a tepid 3.8% growth in the first half of the next fiscal year.

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