Asset quality on the wane: RBI
The RBI report also said stress tests show public sector banks’ capital erosion due to rising non-performing assets (NPA) could bring down their capital adequacy ratio to just 10.9 per cent by March 2014 against the regulatory mandate of 9 per cent.
The report projects that bank NPAs could rise to 4 per cent by March-end and 4.4 per cent by March 2014. Under extreme stress conditions, the system’s NPA could rise to as high as 7.6 per cent by March 2014, the RBI said.
Within the banking system, public sector banks’ NPAs could rise to 4.3 per cent by March 2013. Further, the biggest contributor to NPAs would be agriculture sector, the RBI said in the report.