The Indian economy and the financial system remain robust and resilient, anchored by macroeconomic and financial stability, the Reserve Bank of India (RBI) said in the 29th issue of the Financial Stability Report (FSR) which was released on June 27.
With improved balance sheets, banks and financial institutions are supporting economic activity through sustained credit expansion, it said.
According to the FSR capital to risk-weighted assets ratio (CRAR) and the common equity tier 1 (CET1) ratio of scheduled commercial banks (SCBs) stood at 16.8% and 13.9%, respectively, at end-March 2024.
SCBs’ gross non-performing assets (GNPA) ratio fell to a multi-year low of 2.8 per cent and the net non-performing assets (NNPA) ratio to 0.6 per cent at end-March 2024.
“Macro stress tests for credit risk reveal that SCBs would be able to comply with minimum capital requirements, with the system-level CRAR in March 2025 projected at 16.1%, 14.4% and 13.0%t, respectively, under baseline, medium and severe stress scenarios,” the RBI said in the FSR.
“These scenarios are stringent conservative assessments under hypothetical shocks and the results should not be interpreted as forecasts,” it added.
Non-banking financial companies (NBFCs) remain healthy, with CRAR at 26.6 per cent, GNPA ratio at 4.0% and return on assets (RoA) at 3.3%, respectively, at end-March 2024, it further said.
As per the FSR the global economy is facing heightened risks from prolonged geopolitical tensions, elevated public debt, and the slow progress in the last mile of disinflation.
Despite these challenges, the global financial system has remained resilient, and financial conditions stable.
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