"The banking industry's ratio of gross non-performing assets (NPAs) to total assets is projected to increase to around 5 per cent by March 31, 2011, from 2.3 per cent as on March 31, 2008," Tarun Bhatia, head, finance sector ratings, Crisil said.
The rising delinquency would pull down net profit growth rate from 30-40 per cent last year to an average rate of 10-12 per cent in the next two years, Bhatia said. As of March 2008, total net profit posted by banks stood at Rs 42,000 crore (Rs 420 billion).
In absolute terms, he said, NPAs are projected to more than triple to 1,90,000 crore (Rs 1900 billion) by March 31, 2011, from Rs 56,400 crore (Rs 564 billion) as on March 31, 2008.
This increase will be driven mainly by delinquencies in the corporate and SME loan books, which constitute a major portion of the total advances of banks, he said.
The corporate loan including SME constitute about 60 per cent of loan portfolio while retail loan comprises of 20 per cent.