Gross Non-Performing Assets (GNPA) The banks’ ratio fell to a six-year low of 5.9 per cent in March 2022.
Scheduled commercial sanctions (SCBs) to GNPA ratio stood at 7.4 per cent in March 2021.
The support measures provided by the regulator during the COVID-19 pandemic helped in curbing the GNPA ratio of SCBs, even with the cessation of regulatory relief.
“No further under the assumption of regulatory relief as well as without taking into account the likely impact of stressed asset purchases narco Stress tests indicate that the GNPA ratio of all scheduled co-operative banks may increase from 5.9 per cent in March 2022 to 5.3 per cent by March 2023. factor, ” reserve Bank of India Told.
Rs 6,000 crore National Asset Reconstruction Company (NARCL) or Bad Bank is expected to handle the first set of non-performing accounts of banks in July.
in its 25th issue of financial stability report (FSR) issued on Thursday, the RBI further said that if the macroeconomic environment worsens into a moderate or severe stress scenario, the GNPA ratio may rise to 6.2 per cent and 8.3 per cent, respectively.
“Even at the bank group level, the GNPA ratio in the baseline scenario may come down by March 2023,” it said.
However, in the scenario of severe stress, the GNPA ratio of public sector banks (PSBs) may increase from 7.6 per cent in March 2022 to 10.5 per cent a year later. The GNPA ratio will increase from 3.7 per cent to 5.7 per cent for private sector banks and from 2.8 per cent to 4 per cent for foreign banks during the same period.
According to the FSR, banks as well as non-banking financial institutions have adequate capital buffers to withstand the shocks.
Among financial institutions, banks have reduced the GNPA ratio through recovery, write-off and reduction in slippage.
RBI noted that bank credit growth is in double digits after a long gap, with GNPA ratio to its lowest level in six years and marginal return to profitability.
According to the FSR, macro-stress tests for credit risk suggest that SCBs are well capitalized and all banks will be able to adhere to minimum capital requirements even in adverse stress scenarios.
On banking credit, the report said that the deeper profile of bank credit indicates that most of the revival was in the second half of 2021-22, and has continued so far during the current financial year.
While personal credit remained a major component, credit demand from the industrial sector revived after falling in 2020-21 as well as in the first half of 2021-22.
“A significant portion of new industrial loans were given in the form of working capital loans. Credit growth to the private corporate sector turned positive after two consecutive years of deceleration and divergence,” it said.
Importantly, banks’ balance sheets remain strong, there has been a decline in non-performing assets for both wholesale and retail loans, and capital buffers are adequate, it added.
The central bank publishes the Financial Stability Report (FSR) every year and includes contributions from all financial sector regulators.
Accordingly, it reflects the collective assessment of the Financial Stability and Development Council (FSDC-SC) sub-committee on the risks to the stability of the Indian financial system, the RBI said.