New Delhi, Mar 22 (PTI) Cautioning the government against "any early euphoria" with regards to reduction in NPA in the banking sector, a Parliamentary panel on Tuesday said that the bad loans may go up due to some lag impact of the Covid pandemic.

The Standing Committee on Finance in its report tabled in Parliament observed that the banking system appears to have weathered the pandemic shock well with respect to non-performing assets (NPAs).

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The panel was informed that contrary to RBI's Financial Stability Report projections of the gross NPA ratio of commercial banks increasing from 7.48 per cent in March 2021 to 9.8 per cent by March 2022, the NPA figures at the gross level for public sector banks have decreased from 9.11 per cent as on March 31, 2021, to 7.9 per cent at end-December, 2021.

"The Committee would like to caution against any early euphoria on this count, as there may still be some lag impact of the pandemic for the banking sector in the pipeline," the report said.

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It further said that absorbing excess liquidity that was injected as part of the pandemic response to stimulate the economy is necessary, as there may be the possibility of an increase in NPAs.

The panel was of the view that prudence is still required and the steps taken by the government to reduce NPAs and to effect recovery should be continued with the same vigour.

On digital economy and rising online frauds, the panel said whenever digital frauds are reported by the victims, the onus for prompt redressal should be on the concerned bank and financial institutions.

The customer should not be left in a lurch running from pillar to post for grievance redressal, it said.

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