What if India's banking system gross NPA ratio rises toward 4.2% under RBI's severe stress scenario?
RBI's severe stress scenario pushes the banking-system gross NPA ratio up toward 4.2%, with six banks projected to breach the minimum capital requirement as corporate and retail slippages rise.
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The butterfly cascade
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What it would mean
If this plays out, it is a risk-off shock. RBI's severe stress scenario pushes the banking-system gross NPA ratio up toward 4.2%, with six banks projected to breach the minimum capital requirement as corporate and retail slippages rise. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Financial conditions ▲ · Recession signal ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.