Banks’ NPA  ratio slides  2.8  per cent

Estimated read time 3 min read

By  our  Financial  Correspondent

Mumbai, June  28 (IVC)   The scheduled commercial banks’ Non-performing Assets (NPA)   ratio slid    to a multi-year  low  of  2.8  per  cent.  The  Indian economy and  the financial  system  remain robust and resilient , anchored  by macroeconomic and  financial stability, the  Reserve  Bank of  India (RBI)  said  in its   29th  issue  of the Financial  Stability   Report (FSR)  released here on June 27.

                With  improved balance  sheets, banks and  financial  institutions were  supporting economic activity   through  sustained  credit  expansion, the RBI’s report revealed.

                According  to the  FSR, the  capital to  risk-  weighted  of   capital  assets (CRAR) and  the  common equity  tier1 (CET1) ratio  of the scheduled   commercial  banks  (SCBs) stood  at 16.8  per  cent and  13.9  per  cent respectively at the end of March  this year.

                SCBs’ gross non -performing (GNPA)  ratio  fell  to a  multi-year  low  of  2.8  per  cent and  the  net  non-performing assets (NNPA)  ratio  declined  to 0.6  per  cent at end  March  2024.

                “Macro stress tests for  credit risk reveal that SCBs would  be  able  to  comply  with minimum  capital  requirements, with the  system-level CRAR in March  2025 projected  at16.1 per  cent , 14.4 per  cent and 13.0 per  cent  respectively ,under  baseline, medium  and severe stress scenarios”, the Central Bank said in  the FSR.

                “These scenarios  are stringent conservative assessments  under  hypothetical  shocks and the results  should not  be interpreted  as  forecasts”, it  added.

                Non-banking financial  companies (NBFCs),  remained healthy, with  CRAR at 26.6  per  cent,  GNPA ratio at 4.0 per  cent and return on assets (RoA) at 3.3  per  cent respectively,  at  the  end   of March 2024, the  report  further  added.

                The RBI  noted in the FSR that  the global  economy was  facing  heightened risks  from  prolonged  geopolitical  tensions, elevated  public debt and  the  slow  progress being  made in the  last  mile  if disinflation. Despite  these challenges, the  global  financial system had  remained  resilient and  the  financial conditions stable, the  Reseve bank added.  IVC Ckg Mmi

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