With reference to the ICRA projections for FY27, consider the following statements: 1. Fresh slippages for public sector banks are estimated at ₹1.3 lakh crore. 2. Credit growth is projected to ease to 15-16%. 3. Net Interest Margins are expected to decline during the RBI rate-hiking cycle. Which of the statements given above is/are correct?

Icra projects ₹1.3 lakh crore private bank slippages as credit growth eases to 15-16%

GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims· 28 October 2026

Banking sector stability and asset quality: a key GS3 economic analysis point.

Why in news

ICRA projected a slowdown in credit growth to 15-16% for FY27 and estimated significant asset quality deterioration with ₹1.3 lakh crore in fresh slippages for private banks.

Background

ICRA estimates credit growth will ease from 18-19% to 15-16% in FY27. The agency projects fresh slippages of ₹1 lakh crore for public sector banks and ₹1.3 lakh crore for private players in FY27.

Facts for Prelims

FactICRA projected credit growth for FY27 at 15-16%.
FactEstimated fresh slippages for private banks in FY27: ₹1.3 lakh crore.
FactEstimated fresh slippages for public sector banks in FY27: ₹1 lakh crore.
BodyICRA is a credit rating agency.
FactNet Interest Margins (NIM) are expected to improve during the RBI rate-hiking cycle.

Prelims practice question

With reference to the ICRA projections for FY27, consider the following statements:

Fresh slippages for public sector banks are estimated at ₹1.3 lakh crore.
Credit growth is projected to ease to 15-16%.
Net Interest Margins are expected to decline during the RBI rate-hiking cycle.

Which of the statements given above is/are correct?

(a)2 only
(b)1 and 2 only
(c)1 and 3 only
(d)2 and 3 only

Show answer

Answer: (a) 2 only — Statement 2 is correct. Statement 1 is incorrect: Public sector bank slippages are estimated at ₹1 lakh crore. Statement 3 is incorrect: Net Interest Margins are expected to improve during the RBI rate-hiking cycle.

For Mains

Q. Analyze the impact of rising credit slippages and fluctuating Net Interest Margins on the stability of the Indian banking sector.

Dimensions to cover in your answer

Asset quality risk: Deterioration of bank balance sheets due to high credit expansion and slippages.
Monetary policy transmission: Impact of RBI rate-hiking cycles on Net Interest Margins (NIM) and lending capacity.
Systemic risk: Disproportionate slippage projections between private and public sector banking entities.

Keywords: Credit Growth · Slippages · Net Interest Margin · Asset Quality · Monetary Policy · Public Sector Banks

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