New Delhi [India], The global economy currently faces significant risks arising from ongoing geopolitical tensions, high levels of public debt and slow progress in reducing inflation, according to the Bank's 29th Financial Stability Report (FSR). Reserve Bank of India (RBI). released on Thursday.
Despite these challenges, the report highlighted that the global financial system has managed to remain resilient and maintain stable financial conditions.
Regarding the Indian economy, the report highlighted that the country's economy and its financial system are strong and resilient. This stability is supported by strong macroeconomic fundamentals and a sound financial system. The RBI notes that with healthier balance sheets, Indian banks and financial institutions are actively supporting economic activities through continued credit expansion.
"The Indian economy and financial system remain strong and resilient, anchored by macroeconomic and financial stability," the RBI said.
The report said that as of end-March 2024, the capital to risk-weighted assets ratio (CRAR) and common equity tier 1 (CET1) ratio for scheduled commercial banks (SCBs) were 16.8 percent. and 13.9 percent, respectively. . These ratios are important indicators of a bank's financial health and show how much capital it has relative to its risks.
Furthermore, the report noted a significant improvement in the quality of assets held by banks. The gross non-performing assets (GNPA) ratio fell to a multi-year low of 2.8 percent, while the net non-performing assets (NNPA) ratio fell to 0.6 percent at the end of March 2024. This indicates that banks are effectively managing their non-performing loans, reducing the risks of default.
The report also included macro stress tests for credit risk, which are used to assess how well banks can handle potential financial shocks. These tests project that banks will be able to meet minimum capital requirements even under adverse conditions.
Specifically, the system-level CRAR is projected to be 16.1 percent in a baseline scenario, 14.4 percent in a medium stress scenario, and 13.0 percent in a severe stress scenario for March 2025.
Additionally, the report highlights the health of non-banking financial companies (NBFCs) in India. As of end-March 2024, NBFCs had a CRAR of 26.6 per cent, GNPA ratio of 4.0 per cent and return on assets (RoA) of 3.3 per cent. These figures demonstrate that NBFCs are well capitalized, effectively managing their non-performing assets and achieving good returns on their investments.
Despite these challenges, the report highlighted that the global financial system has managed to remain resilient and maintain stable financial conditions.
Regarding the Indian economy, the report highlighted that the country's economy and its financial system are strong and resilient. This stability is supported by strong macroeconomic fundamentals and a sound financial system. The RBI notes that with healthier balance sheets, Indian banks and financial institutions are actively supporting economic activities through continued credit expansion.
"The Indian economy and financial system remain strong and resilient, anchored by macroeconomic and financial stability," the RBI said.
The report said that as of end-March 2024, the capital to risk-weighted assets ratio (CRAR) and common equity tier 1 (CET1) ratio for scheduled commercial banks (SCBs) were 16.8 percent. and 13.9 percent, respectively. . These ratios are important indicators of a bank's financial health and show how much capital it has relative to its risks.
Furthermore, the report noted a significant improvement in the quality of assets held by banks. The gross non-performing assets (GNPA) ratio fell to a multi-year low of 2.8 percent, while the net non-performing assets (NNPA) ratio fell to 0.6 percent at the end of March 2024. This indicates that banks are effectively managing their non-performing loans, reducing the risks of default.
The report also included macro stress tests for credit risk, which are used to assess how well banks can handle potential financial shocks. These tests project that banks will be able to meet minimum capital requirements even under adverse conditions.
Specifically, the system-level CRAR is projected to be 16.1 percent in a baseline scenario, 14.4 percent in a medium stress scenario, and 13.0 percent in a severe stress scenario for March 2025.
Additionally, the report highlights the health of non-banking financial companies (NBFCs) in India. As of end-March 2024, NBFCs had a CRAR of 26.6 per cent, GNPA ratio of 4.0 per cent and return on assets (RoA) of 3.3 per cent. These figures demonstrate that NBFCs are well capitalized, effectively managing their non-performing assets and achieving good returns on their investments.