CRISIL: bank GNPAs to stay near 2% in FY27; MSMEs under stress
Why in the news
A CRISIL report dated 17 April 2026 found Indian banks coping well with the West Asia conflict, though small-business loans are showing localised stress.
Key facts
- GNPA trend: 11% in FY18, 2.3% in FY25, about 2% by March 2026 (a decade low).
- FY27 outlook: only a minor settling to 2.0-2.2%, with the war nearing its second month.
- Credit market: over Rs 170 trillion.
- Two-speed quality: corporate and retail firm, MSMEs under pressure.
Segment-wise FY27 GNPA forecast
| Segment | Share of credit | FY27 GNPA | Outlook |
|---|---|---|---|
| Corporate | 36% | 1.2%-1.3% | Stable, strong balance sheets cushion oil and gas shocks |
| Retail | 33% | 1.1%-1.3% | Stable; secured housing and auto loans solid, unsecured books stabilising |
| MSME | 19% | 3.4%-3.6% | Under pressure from supply-chain and input-cost shocks |
Why MSME bad loans may rise
- Direct impact: small firms lack the strength to absorb higher crude and freight costs.
- Portfolio seasoning: MSME lending grew at about 20% CAGR over three years; default risk climbs as loans age to mid-cycle.
RELIEF framework
- Full form: Resilience and Logistics Intervention for Export Facilitation.
- Meant to help exporters and MSMEs facing the Hormuz/Suez logistics crisis and prevent a cascading impact on banks.
- Expected measures: extending credit guarantee schemes (like ECLGS) and working capital support for longer payment cycles.
Exam angle
- GNPA = gross non-performing assets, the bad-loan ratio.
- Highest-risk segment: MSME.
- Term: seasoning of a loan portfolio.