RBI waves red flag on burgeoning NPAs
4 years, 4 months ago

RBI waves red flag on burgeoning NPAs

India Today  

The Financial Stability Report, released by the Reserve Bank of India on July 24, highlights a few key challenges that the Indian banking and financial sector are going through, especially due to the Covid-induced lockdown. The stress tests that the central bank carried out reveal that the gross non-performing assets ratio of scheduled commercial banks could worsen to as high as 14.7 per cent at the end of financial year 2020-21, from 8.5 per cent in March 2020, if the adverse economic impact of the pandemic is severe. The RBI report shows that credit growth of public sector banks reduced to 3 per cent year-on-year in March 2020 from 9.6 per cent in March 2019. However, private sector banks reported double-digit credit growth of 11.3 per cent. “While the significant monetary stimulus measures implemented by the RBI has helped to ease the immediate lockdown driven liquidity stress across financial, corporate and the household sector, it is yet to reflect in credit growth which remains muted at 6.1 per cent year-on-year as on July 2020 due to the uncertain economic environment and increased risk aversion,” says Chowdhury.

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