Bank loans are being repaid in India, NPA reached the lowest level in last 10 years

Reserve Bank of India: The risk remains in the high-risk category due to global spillovers, RBI said. It also said that more than half of the respondents expressed declining confidence in the stability of the global financial system. RBI Governor Shaktikanta Das wrote that the trajectories of development of the global and Indian financial systems have changed since the last issue of the FSR was published.

Jun 28, 2023 - 20:23
 0
Bank loans are being repaid in India, NPA reached the lowest level in last 10 years

The Reserve Bank of India said in the new update of its Financial Stability Report that the non-performing asset (NPA) ratio of the country's scheduled commercial banks has come down to a 10-year low of 3.9 percent in March 2023.
The risk remains in the high-risk category due to global spillovers, RBI said. It also said that more than half of the respondents expressed declining confidence in the stability of the global financial system. What is the whole news, let's know.
"Macro stress tests for credit risk suggest that SCBs are well capitalized and all banks comply with minimum capital requirements even under adverse stress scenarios," the Reserve Bank of India said in a new update to the Financial Stability Report released on Wednesday. will be able to do." The gross and net NPA ratio is expected to decline from a high of 11.5 percent and 6.1 percent in March 2018 to 3.9 percent and 1.0 percent, respectively, in March 2023, the RBI said.
The RBI noted that certain segments of non-banking financial intermediaries (NBFIs) have high leverage, which raises systemic concerns. Regarding this, the RBI said, "The high level of off-balance sheet financial leverage indicates that the overall synthetic leverage may reach a historic high."
RBI Governor Shaktikanta Das wrote that since the last issue of the FSR was published, the trajectories of development of the global and Indian financial systems have changed. He said that since the beginning of March 2023, the global financial system has been affected by significant stress from the banking turmoil in the US and Europe. In contrast, the financial sector in India has been stable and resilient, as reflected in steady growth in bank credit, low levels of non-performing assets, and adequate capital and liquidity buffers.
The RBI said that as per the latest systemic risk survey conducted in May 2023, risk appetite has eased in most of the categories contributing to domestic systemic risk. However, the risk from global spillovers remains in the High-Risk category, with more than half of respondents expressing declining confidence in the stability of the global financial system. It cited tightening global financial conditions, slowing global growth, and volatility in capital flows as key risks.

Muskan Kumawat Journalist & Writer