New Delhi: Bank stocks on Wednesday witnessed heavy selling and settled with losses of up to 6% as RBI indicated worsening of NPA situation.

The Reserve Bank in its Financial Stability Report (FSR) on Tuesday said the gross bad loans as percentage of total advances of banks are likely to rise from 11.6% in March 2018 to 12.2% by the end 2018-19 financial year.

Shares of bank stocks tumbled in today’s trade and the S&P BSE Bankex settled at 29,308.66 points, down 1.04%.

Bank of India shares lost 3.75%, Syndicate Bank fell 6.39%, Bank of Baroda (2.54%), Indian Bank (0.21%), UCO Bank (4.22%), SBI (2.06%) and Bank of Maharashtra (2.87%) on BSE. Besides, ICICI Bank fell 3.16% and Axis Bank (1.25%).

“Macro-stress tests indicate that under the baseline scenario of current macroeconomic outlook, SCBs’ (scheduled commercial banks) GNPA ratio may rise from 11.6% in March 2018 to 12.2% by March 2019," FSR said.

Referring to the 11 state-owned banks under prompt corrective action framework (PCA), the RBI said they may experience worsening of their GNPA ratio from 21% in March 2018 to 22.3% by 2018-19 end.

The central bank called for greater vigilance on the domestic macro-economic front saying conditions, which pushed GDP growth to 7.7% in March 2018 quarter, are changing and warned that bad loan situation might worsen.

Meanwhile, Kotak Institutional Equities said in a research note that “there would be very high credit costs in 2018-19 as there are too many assets chasing limited supply of external funds/ new owners".

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