Capitalmind’s Deepak Shenoy warns that write‑offs can hide up to 12% of a loan book, making reported gross NPA figures misleading.
But the reality is that a lender with a ₹1,000 crore loan book, ₹120 crore of bad loans, and ₹100 crore write‑offs will only report ₹20 crore as gross NPA—an effective default of 12%.
The sector averaged 2% gross NPA in 2025, yet analysts argue that write‑off ratios could inflate true default exposure to double that figure.
Investors should map write‑offs against the appropriate vintage of the loan book—short‑term NBFC loans to last year’s balance sheet, long‑term home loans to a 2‑3 year lag.
With the next earnings cycle set for May 2026, market watchers are bracing for tighter margins and potential adjustments in risk‑premium spreads as regulators revisit credit risk frameworks.