Covid spike: ICRA flags risks to banks’ asset quality

Mumbai, January 6

The threat of third wave of Covid poses high risks to banks asset quality, especially the restructured loan book, according to a report by domestic rating agency ICRA.

Besides bad loans, lenders are likely to see challenges on profitability and solvency fronts due to the disruption caused by the Omicron variant, it said. It also sees a 15-20-basis point uptick in restructuring requests from the borrowers.

Demand for loan rejig may increase

As per the report, the third Covid wave could revive the demand for restructuring of loans, including those that were already restructured

ICRA vice-president Anil Gupta said, “With the increased spread of the new Covid variant, there is a high possibility of the occurrence of a third wave.” He said a third wave poses a high risk to the performance of the borrowers that were impacted by the previous waves and hence poses a risk to the improving trend of asset quality, profitability and solvency. — PTI