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

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...

Shrinking middle class in India?-Data show Growing Middle class!

Key Findings from the SBI Eco wrap Report(25th Oct 2024) Income Inequality is Decreasing : The report uses the Gini coefficient to demonstrate a decline in income inequality in India. The shift is most noticeable in lower income brackets, with a substantial portion moving into higher income groups. This aligns with a rightward shift in the income distribution curve. ITR Filings are Increasing : The number of ITR filings has significantly increased, indicating a growing tax base. This growth is particularly evident in previously untapped states (Uttar Pradesh, Bihar, etc.), suggesting broader economic participation.Below is the chart which shows No. of tax payers in Different income Group in AY2014 and AY2024 which clearly shows that the bulk have moved up from Rs.1.5lac to Rs5 lac to Rs.2.5 lac to Rs.10 lac(highlighted in yellow colour) Growth in 'Crorepati' Taxpayers : The number of taxpayers earning over ₹1 crore has increased significantly, highlighting the expansi...

State of the Indian Economy: Navigating Global Uncertainties

The global economic landscape is rapidly evolving, with trade policy uncertainty emerging as the key driver of the near-term outlook. Recent US tariff announcements have stoked fears of a global trade war, with countries still working out their appropriate responses in this uncertain environment. Despite these external headwinds, the Indian economy has exhibited marked resilience. Although the weakening global economic outlook could impact overall growth through weaker external demand, India's domestic growth engines - consumption and investment - are relatively less susceptible to external pressures. Prospects for the farm sector have been boosted by the forecast of an above normal southwest monsoon for 2025, which could augment farm incomes and keep food prices under check. Headline inflation moderated to a 67-month low of 3.3% in March, mainly due to moderation in food prices. Global Economic Outlook: Trade Tensions and Market Volatility The global economic landscape is facing ...

We are what we are !!

Search This Blog