Gross NPAs of commercial banks programmed down to 6.9% in Q2 FY22: RBI

The Reserve Bank of India (RBI), in its report “Trend and Progress of Banking in India 2020-21”, said that the gross non-performing assets (NPA) of programmed commercial banks (SCBs) had fallen by 8.2% at the end of the year. March 2020 at 7.3% at the end of March 2021 and then at 6.9% at the end of September 2021.

The return on assets (RoA) of SCBs fell from 0.2% at end-March 2020 to 0.7% at end-March 2021, thanks to stable income and lower spending, according to the RBI report.

During fiscal year 2020-21, the consolidated balance sheet of SCBs grew, despite the pandemic and the resulting contraction in economic activity.

According to the RBI, in 2021-2022 so far, “nascent signs of recovery” are visible in credit growth. Deposits rose 10.1% at the end of September from 11% a year ago, the central bank said.

The report indicates that the ratio of capital to risk-weighted assets (CRAR) of SCBs strengthened from 14.8% at end-March 2020 to 16.3% at end-March 2021 and to 16.6% at the end of September 2021, in part thanks to an increase in the rates used. profits, recapitalization of public sector banks (PSBs) and raising of capital in the market by PSBs and private sector banks (PVBs).

The RBI has said that some policy measures taken by the RBI in response to the COVID-19 pandemic have reached pre-announced extinction dates in 2021-2022. “Some liquidity measures have been removed as a result, while other regulatory measures, including the postponement of the implementation of the Net Stable Funding Ratio (NSFR), restrictions on dividend payments by banks, the postponement of of the implementation of the last tranche of the capital conservation buffer, has been realigned to avoid prolonged tolerance and financial stability risks while providing targeted support to needy sectors, ”the RBI report said. .

The central bank said that although the opening of new insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) was suspended for a year until March 2021, it constituted the one of the main modes of recovery in terms of the amount recovered.

The RBI said that the growth in the balance sheet of urban cooperative banks (UCBs) in 2020-2021 was driven by deposits, while moderate credit growth led to accelerated investment. “Their financial indicators, including capital situation and profitability, have improved,” said the RBI, adding that the profitability of state cooperative banks and central district cooperative banks improved in 2019-2020. , while the quality of their assets had deteriorated.

The RBI said that the consolidated balance sheet of NBFCs has widened during the period 2020-2021, thanks to the credit and investments of systemically important NBFCs without deposit. “The quality of their assets and their capital reserves have also improved,” the central bank said.

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