The gross non-performing property (GNPA) ratio of scheduled industrial banks (SCBs) could marginally rise to 2.5 per cent in March 2027 from 2.3 per cent in March 2025, the Reserve Financial institution of India’s Monetary Stability Report (FSR) confirmed.
The estimate for GNPA ratio for March 2027 relies on the macro stress assessments that mission capital ratios of banks beneath three situations – a baseline and two antagonistic macro situations over a two-year horizon, incorporating credit score threat, market threat and rate of interest threat within the banking guide within the framework.
“The mixture GNPA ratio of the 46 banks could marginally rise from 2.3 per cent in March 2025 to 2.5 per cent in March 2027 beneath the baseline situation and to five.6 per cent and 5.3 per cent, beneath antagonistic situation 1 and antagonistic situation 2, respectively,” the RBI’s Monetary Stability Report for June 2025 confirmed.
Whereas the baseline situation is derived from the forecasted path of macroeconomic variables, the 2 antagonistic situations are hypothetical stringent stress situations. The antagonistic situation 1 assumes a risky world setting with heightened geopolitical dangers and escalation of world monetary market volatility. The antagonistic situation 2 assumes a synchronised sharp progress slowdown in key world economies.
The report mentioned that the soundness and resilience of SCBs are bolstered by sturdy capital buffers, multi-decadal low non-performing loans ratio and powerful earnings.
The macro stress assessments additional revealed that the mixture capital to risk-weighted property ratio (CRAR) of 46 main SCBs could marginally dip to 17 per cent by March 2027 from 17.2 per cent in March 2025, beneath the baseline situation.
It could decline to 14.2 per cent beneath antagonistic situation 1, and to 14.6 per cent beneath antagonistic situation 2. Nevertheless, not one of the banks would fall wanting the regulatory minimal requirement of 9 per cent even beneath the antagonistic situations, the report mentioned.
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The widespread fairness tier 1 (CET1) capital ratio of the choose 46 banks could rise from 14.6 per cent in March 2025 to fifteen.2 per cent by March 2027 beneath the baseline situation. Nevertheless, it could fall to 12.5 per cent beneath antagonistic situation 1, and to 12.9 per cent beneath antagonistic situation 2. Not one of the banks would breach the regulatory minimal requirement of 5.5 per cent beneath any of those situations, the report confirmed.
The RBI report mentioned that stress assessments on banks’ credit score focus – contemplating high particular person debtors in response to their commonplace exposures – present that within the excessive situation of the highest three particular person debtors of respective banks defaulting, the system degree CRAR would decline by 90 bps and no financial institution would face a scenario of a drop in CRAR beneath the regulatory minimal of 9 per cent.
On this excessive situation, 4 banks would expertise a fall of greater than two proportion factors of their CRARs.
The report mentioned that non-banking monetary corporations (NBFCs) stay wholesome with sizable capital buffers, sturdy earnings and enhancing asset high quality.
A system degree stress take a look at performed on a pattern of 158 NBFCs confirmed that beneath the baseline situation, the system-level GNPA ratio of the pattern NBFCs could rise from 2.9 per cent in March 2025 to three.3 % in March 2026.
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Consequently, their mixture CRAR could dip to 21.4 per cent in March 2026 from 23.4 per cent in March 2025.
Underneath the baseline situation, 10 NBFCs (all within the center layer) having a share of two.1 per cent of whole advances of all NBFCs (higher layer + center layer) could breach the regulatory minimal capital requirement of 15 per cent.