Tag: FSR

Share of upgraded listed debt issues at a three-year high for ICRA and Crisil in Q4 FY21: FSR

Banking & Finance

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The share of upgraded listed debt issues was at a three-year high for two rating agencies while the share of downgraded listed debt issues in total outstanding ratings fell in the fourth quarter of 2020-21 as against previous quarters.

This was revealed by the Financial Stability Report, July 2021 of the Reserve Bank of India.

“On an aggregate basis, the share of downgraded listed debt issues in total outstanding ratings declined significantly during the fourth quarter of 2020-21 vis-à-vis earlier quarters, while the share of upgraded listed debt issues was at a three-year high for both ICRA and CRISIL,” the FSR said.

For ICRA, upgraded and re-affirmed listed debt issues was 99.8 per cent in the fourth quarter of last fiscal while downgraded and suspended issues were 0.2 per cent. This is in contrast to just 88 per cent upgraded and re-affirmed listed debt issues in the fourth quarter of 2019-20.

Similarly, in the case of Crisil upgraded and re-affirmed listed debt issues was 99.9 per cent in the March 2021 quarter versus 91.2 per cent in the fourth quarter of 2019-20.

For Care Ratings too, upgraded and re-affirmed listed debt issues had risen to 95.2 per cent in the fourth quarter of 2020-21 as against 78 per cent in the same period in the previous fiscal.

“Out of the rating downgrades during the fourth quarter of 2020- 21, the share of the NBFC and housing finance company sectors as well as banks and financial services went down significantly as compared to the preceding quarter,” the FSR further noted.

In the quarter ended March 31, 2021, the rating downgrades for NBFCs accounted for 11.1 per cent of the overall downgrades in the quarter as against 28.6 per cent in the December 2020 quarter.

The share of banks, financial services in rating downgrades was nil in the March 2021 quarter versus 11.9 per cent in the previous quarter.

The power sector had the largest share of rating downgrades in the March 2021 quarter at 38.9 per cent as against 38.1 per cent in the previous quarter.

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Bank NPAs may be contained within earlier FSR numbers, says RBI governor, BFSI News, ET BFSI

Banking & Finance

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The Reserve Bank of India sees the non-performing assets of banks remaining within the projections of the financial stability report (FSR) given out in January.

“On NPA position our expectation is that whatever projection we have given in the last FSR, it will be within that. At the end of the March it looks the figures are quite manageable,” RBI Governor Shaktikanta Das told reporters after the Monetary Policy.

“I would not say anything beyond that because the numbers are coming in and our teams are assessing and we will spell out the details in the financial stability report,” he said.

Stable capital position

He said a large number of banks, both in public and private sectors, have raised additional capital from the market through out last year.

“I have mentioned in my statement the need to build up provisioning and capital buffers. so that is the message we are giving to banks and NBFCs that they need to augment their capital because there could be some stress arising out of the second wave. That is still an assessment.”

The overall capital position of the banks both in the public and private sector is at very stable levels and they are meeting the regulatory requirements, with some being even much higher.

Financial stability report

Banks’ gross non-performing assets may rise to 13.5% by September 2021, from 7.5% in September 2020 under the baseline scenario, according to the Financial Stability Report (FSR) released by RBI in January this year.

If the macroeconomic environment worsens into a severe stress scenario, the GNPA ratio may escalate to 14.8%, the report had said.

“The stress tests indicate that the GNPA ratio of all scheduled commercial banks (SCBs) may increase from 7.5% in September 2020 to 13.5% by September 2021 under the baseline scenario,” the FSR report added.

Among the bank groups, public sector banks’ (PSBs) GNPA ratio of 9.7% in September 2020 may rise to 16.2% by September 2021 under the baseline scenario, it noted.

The gross non-performing asset (GNPA) ratio of private sector banks (PVBs) and foreign banks (FBs) may increase from 4.6% and 2.5% to 7.9% and 5.4%, respectively, over the same period.

In the severe stress scenario, the GNPA ratios of PSBs, PVBs and FBs may rise to 17.6%, 8.8% and 6.5%, respectively, by September 2021, the report said.



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