The Indian economy and the financial system remain robust and resilient, anchored by macroeconomic and financial stability. With improved balance sheets, the country's banks and financial institutions are supporting economic activity through sustained credit expansion, according to the RBI's Financial Stability Report released on Thursday.
Gross non-performing assets (GNPA) ratio of scheduled commercial banks fell to a multi-year low of 2.8% and the net non-performing assets (NNPA) ratio to 0.6% at end-March 2024, the report states.
Non-banking financial companies (NBFCs) also remain healthy, with CRAR at 26.6%, GNPA ratio at 4.0% and return on assets (RoA) at 3.3%, respectively, at end-March 2024, it adds.
According to the RBI report, the capital to risk-weighted assets ratio (CRAR) and the common equity tier 1 (CET1) ratio of scheduled commercial banks (SCBs) stood at 16.8% and 13.9%, respectively, at end-March 2024.
The report states that macro stress tests for credit risk reveal that SCBs would be able to comply with minimum capital requirements, with the system-level CRAR in March 2025 projected at 16.1%, 14.4% and 13.0%, respectively, under baseline, medium and severe stress scenarios.
These scenarios are stringent conservative assessments under hypothetical shocks and the results should not be interpreted as forecasts.
The financial stability report also observes that the global economy is facing heightened risks from prolonged geopolitical tensions, elevated public debt, and the slow progress in the last mile of disinflation.
Despite these challenges, the global financial system has remained resilient, and financial conditions stable.
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