Skip to main content

How Indian Banks are performing? Less stress and Healthier!

The Reserve Bank of India (RBI) released its 25th Financial Stability Report (FSR) on June 28, 2023. The report assessed the state of the Indian financial system and identified the key risks to its stability.

The report found that the Indian financial system is broadly stable, but there are some risks that need to be monitored. These risks include:

  • The rising debt levels of the corporate sector and some retail sector like credit cards which are unsecured.
  • The increasing interconnectedness of the financial system.
  • The potential for a sharp correction in asset prices due to global recession in the coming months

The report also noted that the RBI is taking steps to mitigate these risks. These steps include:

  • Raising the capital requirements for banks.
  • Strengthening the regulation of non-banking financial companies.
  • Increasing the resilience of the financial system to shocks by doing Stress tests at periodic intervals.


Here are some of the key highlights of the report:

  • The gross non-performing assets (NPAs) of banks declined to 3.9% in March 2023, from 11.5% in March 2018.
  • The report further said the banking system profitability improved with return on assets (ROA) increasing to 1.1 percent in 2023 from a low of - 0.2 percent in 2018. This, in turn, helped the capital to risk-weighted assets ratio (CRAR) 35 to reach a record high of 17.1 percent in 2023..
  • The liquidity in the financial system is adequate.Bank deposits have grown by 10% whereas Credit has grown by 15%,but due to adequate deposits accretion and various other measures by RBI,the liquidity is sufficient in the system to support growth and bring down inflation.
  • The financial system is resilient to shock

  • However it is to be noted that the RBI has taken a number of steps to improve asset quality in the banking system over the years, including:

    • Raising the provisioning requirements for banks and provisioning level has touched 70% by March 2023 unlike in the past.
    • Strengthening the asset classification framework.
    • Introducing a new resolution framework for stressed assets.
    .

The report concluded that the Indian financial system is well-positioned to withstand shocks, but there is a need to remain vigilant and take steps to monitor risks. 

Comments

Post a Comment

Popular posts from this blog

How to prepare for the consequences of Iran war

  The COVID-19 pandemic has taught us valuable lessons about resilience in business. One key takeaway is the importance of conserving cash and other resources that may become scarce during challenging times. Businesses must prioritize financial prudence to sustain operations and navigate uncertainties effectively. This approach not only helps in weathering immediate crises but also positions organizations for long-term stability and growth. Reflecting on these lessons can guide future strategies and enhance preparedness for any unforeseen events.
Post a Comment
Read more

Why Indian Rupee is falling steeply against US dollar?

  The Indian Rupee recently crossed the 97 mark against the US Dollar, and it doesn't seem to be slowing down. If you've been tracking exchange rates or planning a trip abroad, you've probably felt the pinch. Everything from imported electronics to cooking oil is getting more expensive. And your money just doesn't stretch as far as it used to. This isn't a one-day blip. The rupee has been on a steady downward slide for months, and the reasons go deeper than most headlines suggest. It's a mix of what's happening inside India's economy and what's happening across the globe. Trade deficits, foreign investors pulling out money, rising oil prices, the US Federal Reserve keeping interest rates high — all of these are pulling the rupee in the wrong direction at the same time. In this post, we'll break down the key domestic pressures weighing on the rupee and the global forces making the US Dollar stronger. We'll also look at what the Reserve Bank ...
Post a Comment
Read more

Hanuman and Ganesha!

  The two major loved deities of the Hindu pantheon are Hanuman and Ganesha. Let us dwell into the concepts and significance of these two dieties. Ganesha, the son of Parvati and Shiv, is worshipped first before starting any new job or work. Even if you want to start writing or reading , you invoke the blessings of Lord Ganesha who goes under various names- Ganapathi, Vigneshwar, Vinayak, and  Pillayar in Tamilnadu. Ganesha Gayathri, Pancharatnam are some of the important Ganesha mantras and hymns. Adi Ganesha idol is in a Temple near Tiruvarur in Tamilnadu with a human face.The mythological story says that Shiv slew His head and then fixed the head of the animal that He saw first after this beheading of His son. Ganesha after that with the elephant head is worshipped as the wisdom god by Hindus. Why only Hindus. He is worshipped in Indonesia where He finds Himself in their currency notes. He is considered the destroyer of evil in Japan. In Mexico, Ganesha idols were said to h...
Post a Comment
Read more