Overall risks to banking sector remained elevated due to asset quality concerns: RBI
Stress test suggests that in the baseline scenario, GNPAs of the banking sector may rise from 10.2% of gross advances in September 2017 to 10.8% in March 2018 and further to 11.1% by September 2018, said the RBI.
The gross non-performing advances (GNPA) ratio and the stressed advances ratio of the banking sector increased between March 2017 and September 2017, said the Reserve Bank of India's FSR.
The RBI's half-yearly Financial Stability Report released on late Thursday evening said, "The overall risks to the banking sector remained elevated due to asset quality concerns. Credit growth of scheduled commercial banks (SCBs) showed an improvement between March and September 2017, while public sector banks (PSBs) continued to lag behind their private sector peers."
The central bank, however, said that stress test suggests that in the baseline scenario, GNPAs of the banking sector may rise from 10.2% of gross advances in September 2017 to 10.8% in March 2018 and further to 11.1% by September 2018.
The other key observations of the RBI report are:
Amazon Great Indian Festival Sale 2023 likely to begin soon; discounts, exchange and bank offers, and more
Domestic capital goods firm announces expansion plan, to venture into Dubai market with Rs 500 million investment
India vs Australia 3rd ODI Free Live Streaming: When and How to watch IND VS AUS match live on Web, tv, mobile apps online
NPS Tier II Default Scheme: Flexibility, easy withdrawals, and no minimum balance; here's what makes it a smart choice
SCBs’ return on assets (RoA) remained unchanged at 0.4% between March and September 2017 while PSBs have continued to record negative profitability ratios.
Overall, capital to risk-weighted assets ratio (CRAR) improved from 13.6 per cent to 13.9 per cent between March 2017 and September 2017.
The share of large borrowers both in total SCBs’ loans as well as GNPAs declined between March and September 2017.
GNPAs of the NBFC sector as a percentage of total advances increased between March 2017 and September 2017.
The network analysis indicates that the degree of interconnectedness in the banking system has decreased gradually since 2012. The joint solvency-liquidity contagion analysis shows that the losses due to default of a bank have declined.
From the perspective of larger financial system, SCBs continued to be the dominant players accounting for nearly 47 per cent of the bilateral exposure followed by asset management companies managing mutual funds (AMC-MFs), non-banking financial companies (NBFCs), insurance companies, housing finance companies (HFCs) and all-India financial institutions (AIFIs).
It may be noted that the FSR reflects the overall assessment on the stability of India’s financial system and its resilience to risks emanating from global and domestic factors. The Report also discusses issues relating to development and regulation of the financial sector.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
Retirement Planning: How long-term recurring deposit is a low-risk, guaranteed return investment for senior citizens?
JSW Infrastructure IPO opens for subscription: Check price band, lot size, share listing date and time on NSE, BSE
Traders' Diary: Buy, sell or hold strategy on IRCTC, LIC Housing Finance, Lemon Tree, ONGC, Tech Mahindra, over a dozen other stocks today
Dividend, stock split shares this week: HAL, Brightcom Group, Bajaj Holdings & Investment among other shares to trade ex-date
Delta Corp, Bajaj Finance, pharma companies, LIC, CEAT, and Karnataka Bank among top stocks to watch today