RBI report says banks' NPAs declined from 11.2% in FY18 to 9.1% in FY19
26 December 2019
The banking sector showed improvement in its working with the gross non-performing assets (GNPA) ratio of scheduled commercial banks (SCBs) declining from 11.2 per cent in March 2018 to 9.1 per cent in March 2019 and a return to profitability in the first half of the 2019-20 fiscal, according to the Reserve Bank of India.
This turnaround has been facilitated by a traction in insolvency and bankruptcy code (IBC) and the recapitalisation of public sector banks (PSBs) that gave more breathing space for PSBs, the central bank noted in its `Report on Trend and Progress of Banking in India 2018-19’.
In the co-operative banking arena, the consolidated balance sheet of urban co-operative banks (UCBs) expanded in 2018-19 on account of robust deposit growth, although, a fall in interest income adversely affected their profitability, RBI noted.
Among rural co-operatives, the financial health of state co-operative banks and district central co-operative banks weakened with an increase in the non-performing assets and slowdown in profitability.
The pace of credit expansion by NBFCs, which began slowing in 2018-19, continued in the first half of 2019-20, largely affected by the performance of non-deposit taking systemically important NBFCs (NBFCs-ND-SI), though capital buffers remained above the stipulated norms. Bank credit remained a stable source of funding for NBFCs.
The report also offers some perspectives on the evolving outlook for India’s financial sector.
RBI’s Report on Trend and Progress of Banking in India is a statutory publication. This report presents the performance of the banking sector, including co-operative banks, and non-banking financial institutions during 2018-19 and 2019-20 so far.