In general, the horizon should depend on whether the shocks are temporary or permanent, whether they emerged on the supply or demand side, whether they are domestic or external, on their potential for becoming entrenched in pricing decisions and on their implications for the fragility of the financial system.
This does not mean that NPAs will not rise in this economic slowdown. NPAs may indeed rise, as the Reserve Bank has pointed out. But given the strength of the banks’ balance sheets, that rise is not likely to pose any systemic risks, as it might in many advanced countries.