Some thoughts on NPA: NPA cycle this time will be different from the prior cycle. We are unlikely to see chunky NPAs of the past - power, steel, textile cos which had to go down and under are already down and out.

There maybe still some NPAs from large corporate, but much less than the prior cycle. NPAs will come primarily from MSMEs and retail. Hoping that the govt guarantee scheme will enable MSMEs to manage their affairs better and shock to the banking system mitigated.

Retail is likely to throw up higher NPAs. But retails is also priced for higher NPAs. Also, over 50% of retail is mortgages.

PPOPs of banks/NBFCs are also substantial. As BajFinance CEO said on the call, with 8%+ NIM, their ability to withstand shocks is high. Many financial firms have raised huge capital. Case in point- RBL Bank raised 2800 cr, current mktcap 5500 cr.

Caveat- economic activity restarts (even if gradually) and Covid doesnt force a bigger lockdown.