A recent RBI report on ‘Trend and Progress of Banking in India 2018-19 reported that the gross NPA ratio fell from 11.2 per cent in FY18 to 9.1 per cent in FY19. After prolonged stress; the banking sector returned to profitability after a gap of two years in the first half of 2019-20.
Crux of the Matter
The RBI praised the recapitalisation of PSU banks for strengthening the capital base.
Insolvency and Bankruptcy Code (IBC) also began to gain traction in enhancing resolutions.
The report also states that a decline in the slippage ratio along with a reduction in outstanding GNPAs has helped in improving the GNPA ratio.
The report adds that the restructured standard advances to gross advances ratio declined after the asset quality review (AQR) in 2015 and reached 0.55% at end-March 2019.
Private sector banks played a larger role in improving the asset quality of SCBs.
The report also says that credit growth revival that began in FY18 maintained momentum but it turned anaemic in the current year while the overhang of NPAs remains high.
The slow macroeconomic growth also created fear for the growth in the Indian banking industry along with increasing incidents of fraud.
Curiopedia
The Reserve Bank of India is India’s central bank, which controls the issue and supply of the Indian rupee. RBI is the regulator of entire Banking in India. RBI plays an important part in the Development Strategy of the Government of India. RBI regulates commercial banks and non-banking finance companies working in India. It serves as the leader of the banking system and the money market. It regulates the money supply and credit in the country. The RBI carries out India’s monetary policy and exercises supervision and control over banks and non-banking finance companies in India. RBI was set up in 1935 under the Reserve Bank of India Act,1934. More Info
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