MUMBAI: Reserve Bank of India on Thursday released the 28th issue of the Financial Stability Report, December 2023 reflecting the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability and the resilience of the Indian financial system.
According to the RBI report, Scheduled Commercial Banks‘ gross non-performing assets (GNPA) ratio continued to decline to a multi-year low of 3.2 per cent and the net non-performing assets (NNPA) ratio to 0.8 per cent in September 2023.
RBI further stated that the Indian economy and the domestic financial system have remained resilient which is supported by strong macroeconomic fundamentals and healthy balance sheets of financial institutions, moderating inflation, improving external sector position and continuing fiscal consolidation.
However, RBI also stated that the global economy is facing multiple challenges: prospects of slowing growth; large public debt; increasing economic fragmentation; and prolonging geopolitical conflicts.
As per the report, the capital to risk-weighted assets ratio (CRAR) and the common equity tier 1 (CET1) ratio of scheduled commercial banks (SCBs) stood at 16.8 per cent and 13.7 per cent, respectively, in September 2023.
“Macro stress tests for credit risk reveal that SCBs would be able to comply with minimum capital requirements, with the system-level CRAR in September 2024 projected at 14.8 per cent, 13.5 per cent and 12.2 per cent, respectively, under baseline, medium and severe stress scenarios,” RBI report said.
Also, the RBI said that the resilience of the non-banking financial companies (NBFCs) sector improved with CRAR at 27.6 per cent, GNPA ratio at 4.6 per cent and return on assets (RoA) at 2.9 per cent, respectively, in September 2023.
The Financial Stability Reports, published by the Reserve Bank of India are periodic exercises for reviewing the nature, magnitude and implications of risks that may have a bearing on the macroeconomic environment, financial institutions, markets and infrastructure. These reports also assess the resilience of the financial sector through stress tests.
According to the RBI report, Scheduled Commercial Banks‘ gross non-performing assets (GNPA) ratio continued to decline to a multi-year low of 3.2 per cent and the net non-performing assets (NNPA) ratio to 0.8 per cent in September 2023.
RBI further stated that the Indian economy and the domestic financial system have remained resilient which is supported by strong macroeconomic fundamentals and healthy balance sheets of financial institutions, moderating inflation, improving external sector position and continuing fiscal consolidation.
However, RBI also stated that the global economy is facing multiple challenges: prospects of slowing growth; large public debt; increasing economic fragmentation; and prolonging geopolitical conflicts.
As per the report, the capital to risk-weighted assets ratio (CRAR) and the common equity tier 1 (CET1) ratio of scheduled commercial banks (SCBs) stood at 16.8 per cent and 13.7 per cent, respectively, in September 2023.
“Macro stress tests for credit risk reveal that SCBs would be able to comply with minimum capital requirements, with the system-level CRAR in September 2024 projected at 14.8 per cent, 13.5 per cent and 12.2 per cent, respectively, under baseline, medium and severe stress scenarios,” RBI report said.
Also, the RBI said that the resilience of the non-banking financial companies (NBFCs) sector improved with CRAR at 27.6 per cent, GNPA ratio at 4.6 per cent and return on assets (RoA) at 2.9 per cent, respectively, in September 2023.
The Financial Stability Reports, published by the Reserve Bank of India are periodic exercises for reviewing the nature, magnitude and implications of risks that may have a bearing on the macroeconomic environment, financial institutions, markets and infrastructure. These reports also assess the resilience of the financial sector through stress tests.
