RBI released its half yearly Financial Stability Report and said that banks' battle with NPAs depended on an expected trunaround in the economic scenario during the coming year up to March 2016
The Gross Non Performing Assets (GNPA) of all Scheduled Commercial Banks rose to 4.5% as of September 2014. The GNPAs were at 4.1% as of March 2014. The RBI pointed out that the asset quality had not imporved over the last six months but the liquidity scenario had improved.
“GNPA ratio of all SCBs may decline to 4.0 per cent by March 2016 from 4.5 per cent as at end September 2014. However, if macroeconomic conditions deteriorate, the GNPA ratio may increase further and under a severe stress scenario could rise to around 6.3 per cent by March 2016,” the RBI said.
The RBI noted that the global recovery had weakened, “Without a change in the pattern of growth and stability that still leans heavily on easy money, vulnerabilities remain, especially with inflation ruling below policy targets in many jurisdictions and the threat of deflation continuing in others,” the report said.
In terms of the stability of banks, the report said, “As per the Banking Stability Indicator (BSI), risks to the banking sector have not changed much since the publication of the previous FSR. The BSI showed a continuous increase in vulnerability in the banking sector over the past few years.”
On the wider point of defaulters and dealing with defaulters, the RBI said, “With the increased regulatory focus on segregating the cases of wilful defaults and ensuring the equity participation of promoter(s) in the losses leading to defaults, there is a need for greater transparency in the process of carrying out a net economic value impact assessment of large Corporate Debt Restructuring (CDR) cases.”
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam
Fiercely independent and pro-consumer information on personal finance.
1-year online access to the magazine articles published during the subscription period.
Access is given for all articles published during the week (starting Monday) your subscription starts. For example, if you subscribe on Wednesday, you will have access to articles uploaded from Monday of that week.
This means access to other articles (outside the subscription period) are not included.
Articles outside the subscription period can be bought separately for a small price per article.
Fiercely independent and pro-consumer information on personal finance.
30-day online access to the magazine articles published during the subscription period.
Access is given for all articles published during the week (starting Monday) your subscription starts. For example, if you subscribe on Wednesday, you will have access to articles uploaded from Monday of that week.
This means access to other articles (outside the subscription period) are not included.
Articles outside the subscription period can be bought separately for a small price per article.
Fiercely independent and pro-consumer information on personal finance.
Complete access to Moneylife archives since inception ( till the date of your subscription )
