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RBI: Balance sheets of Indian banks showed so much improvement after 7 years, situation improved due to decrease in NPA

RBI Report On Banks: India’s central bank Reserve Bank of India has released the ‘Trends and Progress of Banking in India’ report on Tuesday regarding the health of the country’s banks and has told many big facts in it. The most powerful thing in this is that the figures presented by the RBI regarding the health of the country’s banks are very encouraging, although the RBI has also advised the banks to be cautious.

Balance sheets of banks show so much improvement after seven years – RBI

RBI has clearly stated in its review report that the financial health of the country’s banks has started showing improvement and for this the premise has to be kept in mind that in the financial year 2021-22 the growth of the balance sheet of the banks will come in double digits. And this has happened after seven years. Certainly it shows better asset quality and capital position of banks and there has been a reduction in gross NPA which is encouraging.

Decline in NPAs of banks is a good sign – RBI

The Reserve Bank has informed in the report that the gross non-performing assets (GNPA) of Indian banks ie the size of stranded loans has come down to five per cent in September. But the current macro-economic conditions may affect the health of the lenders. The Reserve Bank of India (RBI) has also informed in its report that in September 2022 of the financial year 2021-22, the GNPA of the banks has come down to five per cent of the total assets. The report says that at the end of the financial year 2021-22, the GNPA of the banks stood at 5.8 per cent. It reached the highest level after the asset quality review of banks in the financial year 2017-18.

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How was the improvement in the balance sheets of the banks visible?

During this period, writing off the loans of public sector banks was a major reason for the decline in GNPA, whereas in the case of private banks, the situation has improved due to upgrading of loans. The steady decline in the GNPA of banks over the past few years has been credited to the reduction in loan defaults and steps like recovery of outstanding loans and their write-off.

GNPA of foreign banks increased

According to this report, it has been said that even though the Indian banking sector currently remains strong due to improved asset quality and strong capital base, policy makers will have to be aware of the rapidly changing macro-economic conditions. If this does not happen, the effect on the health of the regulated units can be seen. The RBI report says that unlike Indian banks, the GNPA of foreign banks has increased from 0.2 per cent to 0.5 per cent in FY 2021-22.

Branches of commercial banks increased during the financial year 2021-22

It was also said in the RBI report that during the financial year 2021-22, there has been an increase of 4.6 percent in the opening of branches of commercial banks. This has been seen after two consecutive years of decline.

Banks were advised not to be negligent

Although the restructuring asset ratio increased by 1.1 percentage points for all borrowers and 0.5 per cent for large borrowers, the loan restructuring scheme paved the way for helping individuals and small businesses. The increase in loans given to retail business has reduced the dependence on big lenders. However, the RBI report advises not to be negligent in view of the current economic situation.


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