Bank Npas To Stay Stable At 22.2% By FY27: Crisil

(MENAFN- KNN India) New Delhi, Apr 18 (KNN) Crisil Ratings expects Indian banks to maintain stable asset quality over the next two years, with gross non-performing assets (NPAs) projected at 2.0-2.2 percent by March 2027.

This is only marginally higher than the likely historic low of around 2.0 percent as of March 2026, indicating continued resilience despite external headwinds, reported ANI.

The base case assumes disruptions from the West Asia conflict will last three to four months, moderating GDP growth to 7.1 percent from 7.6 percent last year, while keeping NPAs 'range-bound'.

Corporate, Retail Segments Strong; MSMEs Face Mild Stress
The corporate segment, accounting for about 36 percent of total bank credit, is expected to see stable asset quality, with NPAs at 1.2-1.3 percent in FY27, supported by stronger balance sheets and improved leverage.

A stress test covering 65 percent of rated corporate debt suggests limited impact across most sectors.

Retail loans, which make up about 33 percent of credit, are also expected to remain stable with NPAs in the 1.1-1.3 percent range, led by strong housing loan performance and tighter underwriting in unsecured lending.

In contrast, the MSME segment, comprising around 19 percent of credit, may see a modest rise in stress, with NPAs projected at 3.4-3.6 percent due to higher input costs, supply chain disruptions and working capital pressures, though policy support is expected to contain risks.

Agri Risks, Policy Support Key to Outlook
The agriculture segment, accounting for about 12 percent of credit, remains sensitive to monsoon conditions and will require close monitoring amid expectations of below-normal rainfall.

Crisil noted that while the banking system is well-positioned to absorb near-term shocks, the duration of geopolitical tensions and policy responses will be critical. Strong corporate fundamentals, improving retail credit quality and targeted policy measures are expected to keep NPAs under control through FY27.

(KNN Bureau)

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