The ratio of NPAs in the country's banks has come down significantly to a decade low

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Mumbai: Gross Non-Performing Assets (GNPA) in the country's banks is continuously declining and further declined to a ten-year low of 3.90 percent in March 2023, according to a Reserve Bank of India (RBI) report. Net NPAs have come down to 1 percent, it has also been noted in the Financial Stability Report. As compared to the world, in March 2018, the gross NPA ratio was 11.50 percent while the net NPA was 6.10 percent, which has drastically reduced and the situation has become favorable for the country's banks.

A comprehensive stress test for credit risk found that the country's banks would be able to comply with the minimum capital requirement. Banks are well capitalized and currently have the strength to withstand large economic shocks for a period of one year without infusing additional capital.

According to the stress test, the GNPA of scheduled commercial banks is likely to decrease to 3.60 percent by March 2024.

Banks' asset quality is also improving broadly and loan stress levels are steadily declining in most sectors.

The Systemic Risk Survey conducted in May 2023 found that most of the risks responsible for systemic risk at home have declined. However, risks resulting from global developments remain in the high risk category. More than fifty percent of those surveyed said confidence in the stability of the global financial system is declining.

As a result of the banking crisis in America and Europe, there has been a significant strain on the global financial system since the beginning of March 2023, said the Governor of the Reserve Bank of India, Shaktikanta Das, in the preface of the report. However, against this, India's financial system has remained stable and resilient which can be understood from credit growth, low NPA ratio and adequate capital availability. The Indian economy has shown a strong recovery amid uncertainty and numerous challenges in the emerging economies. Global monetary conditions, global economic slowdown and volatility in capital flows have been described as major risks.


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