Crisil Projects Small Finance Banks' GNPA to Drop by March 2027
· Business · Economic Times
Small finance banks are expected to see an improvement in asset quality, with gross non-performing assets projected to decline by 120 basis points by March 2027. Crisil Ratings estimates the GNPA ratio will fall to between 2.6% and 2.8% by that date, down from 3.8% recorded at the end of this year. This recovery is attributed to better credit performance in microfinance portfolios and steady growth in non-microfinance segments. The rating agency noted that tighter underwriting practices have improved borrower selection, which helped mitigate credit stress caused by over-indebtedness. GNPAs from the microfinance book alone are expected to ease to 3.8-4% by March 2027.
Why it matters
The projected improvement in asset quality suggests greater financial stability for small finance banks, which could translate into more consistent credit availability for microfinance borrowers and small businesses across India.
Read the original report — Economic Times
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