Scheduled commercial bank gross NPAs down to 6.9% in Q2 FY22: RBI

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

The return on assets (RoA) of SCBs improved from 0.2% at the end of March 2020 to 0.7% at the end of March 2021, helped by stable revenues and lower expenses, according to the RBI report.

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

According to the RBI, in 2021-22 so far, “nascent signs of recovery” are visible in credit growth. Deposits rose 10.1% at the end of September, compared with 11% a year ago, the central bank said.

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

The RBI has stated that certain policy measures taken by the RBI in response to the COVID-19 pandemic have reached pre-announced sunset dates in 2021-22. “Certain 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, postponement implementation of the final tranche of the capital conservation buffer, have been realigned to avoid prolonged forbearance and financial stability risks while providing targeted support to sectors in need,” the report said. the RBI.

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

The RBI said the balance sheet growth of urban co-operative banks (UCBs) in 2020-21 was driven by deposits, while weak credit growth led to an acceleration in investment. “Their financial indicators, including capital position and profitability, have improved,” the RBI said, adding that the profitability of state cooperative banks and district central cooperative banks improved in 2019-20. , while the quality of their assets deteriorated.

The RBI said the consolidated balance sheet of NBFCs grew in 2020-2021, thanks to credit and investments from systemically important NBFCs that do not take deposits. “Their asset quality and capital buffers have also improved,” the central bank said.

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