Indian Financial System Shows Unprecedented Resilience with Historic GNPA Low

The Reserve Bank of India’s June Financial Stability Report reveals the Indian financial system's robustness, marked by a multi-year low GNPA ratio of 2.8% as of March 2024. Scheduled Commercial Banks also reported a significant drop in GNPA and NNPA ratios, further emphasizing the stability despite challenging global conditions.

In a testament to the strength and stability of the Indian financial system, the Reserve Bank of India's (RBI) June Financial Stability Report has revealed that the Gross Non-Performing Assets (GNPA) ratio hit a multi-year low of 2.8% at the end of March 2024.

The report highlights that Scheduled Commercial Banks (SCBs) experienced a drop in their GNPA ratio to 2.8% and their Net Non-Performing Assets (NNPA) ratio to 0.6% during the same period, showcasing a resilient banking sector.

'The Indian economy and financial system remain robust and resilient, anchored by macroeconomic stability. With improved balance sheets, banks and financial institutions are fostering economic activity through sustained credit expansion,' the report emphasized.

The report also noted that the capital to risk-weighted assets ratio (CRAR) and the common equity tier 1 (CET1) ratio of SCBs stood at 16.8% and 13.9%, respectively, at the end of March 2024. These figures highlight the banks' capacities to withstand financial stress.

According to macro stress tests for credit risk, SCBs are projected to uphold the minimum capital requirements, with a system-level CRAR projected at 16.1%, 14.4%, and 13.0% under baseline, medium, and severe stress scenarios, respectively, by March 2025.

Further examining the viability of non-banking financial companies (NBFCs), the report indicated a healthy state with a CRAR of 26.6%, GNPA ratio of 4.0%, and return on assets (RoA) at 3.3% by end-March 2024.

On the global front, the report underlined that despite ongoing geopolitical tensions and economic challenges, the global financial system remains resilient and financial conditions stable.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)