Private Banks Expected to Face Higher NPA Growth Compared to Public Sector Banks in FY27
Private banks to see a higher rise in NPAs than public peers in FY27
The Economic Times
Image: The Economic Times
Private banks in India are projected to experience a rise in non-performing assets (NPAs) to 2.0% in FY27, up from 1.8% in FY26, according to ICRA. This contrasts with public sector banks, which are expected to see NPAs increase to 1.2% from 0.9%. The stress is primarily attributed to higher exposure to unsecured retail and MSME loans.
- 01Private banks' NPA generation is projected to rise to 2.0% in FY27.
- 02Public sector banks are expected to see NPAs increase to 1.2%.
- 03The rise in NPAs is driven by higher exposure to unsecured loans.
- 04The MSME and retail segments are experiencing significant stress.
- 05Ongoing geopolitical tensions may impact personal loan performance.
Advertisement
In-Article Ad
According to ICRA, private banks in India are anticipated to see a significant increase in non-performing assets (NPAs) in FY27, rising to 2.0% from 1.8% in FY26. In contrast, public sector banks are expected to experience a smaller rise in NPAs, increasing from 0.9% to 1.2%. The primary reason for the divergence is the private banks' higher exposure to unsecured retail and micro, small, and medium enterprises (MSME) loans, which have been a major source of stress within the financial sector. ICRA highlights that the stress is particularly concentrated in the MSME and retail segments, with the rural economy facing significant challenges. Additionally, the ongoing conflict in West Asia adds uncertainty, with potential job losses in the IT sector posing risks for personal loan performance.
Advertisement
In-Article Ad
The rise in NPAs for private banks could lead to tighter lending conditions, potentially affecting personal loans and credit availability for consumers.
Advertisement
In-Article Ad
Reader Poll
Do you think private banks will manage their NPAs effectively in FY27?
Connecting to poll...
More about ICRA
Adani Power Shares Surge to Record High Following Nuclear Energy Initiative
Business Standard • Apr 20, 2026
India's Wholesale Inflation Reaches 38-Month High of 3.9% Amid Rising Energy Costs
The Economic Times • Apr 16, 2026
West Asia Tensions Challenge India's Economic Resilience to Energy Shocks
economictimes_indiatimes • Apr 14, 2026
Read the original article
Visit the source for the complete story.