The RBI on Thursday said banks’ gross NPA ratio has fallen to a seven-year low of 5 per cent and the banking system remains sound and well-capitalised.
The declining tendency in the Gross Non-Performing Assets (GNPA) ratio is likely to continue and under the baseline scenario of the stress testing framework, it is projected to fall further to 4.9 per cent in September 2023, the 26th issue of the Financial Stability Report (FSR) said.
The report further said the capital positions of scheduled commercial banks (SCBs) remained strong in September 2022. The Capital to Risk Weighted Assets Ratio (CRAR) and Common Equity Tier 1 (CET1) ratio of SCBs stood at 16 per cent and 13 per cent, respectively.
“Their GNPA ratio have been steadily trending down to a seven-year low of 5 per cent in September 2022, while net non-performing assets (NNPA) have dropped to ten-year low of 1.3 per cent of total assets,” it said.
The provisioning coverage ratio (PCR) has been increasing steadily since March 2021 to 71.5 per cent.
The profit after tax of SCBs registered a growth of 40.7 per cent in the first half of the current fiscal, led by strong growth in net interest income and a reduction in provisions.
The report also said the global economy is facing formidable headwinds with recessionary risks looming large.
The interplay of multiple shocks has resulted in tightened financial conditions and heightened volatility in financial markets, it pointed out.
For emerging market economies (EMEs), it said, the challenges are even harsher as they encounter global spillovers, debt fragility, currency volatility and capital outflows.