The Reserve Bank of India (RBI), in its 'Trend and Progress of Banking in India 2020-21' report, has said scheduled commercial banks' (SCB) gross non-performing assets (NPAs) declined from 8.2 per cent at end-March 2020 to 7.3 per cent at end-March 2021 and further to 6.9 per cent at end-September 2021.
The return on assets (RoA) of SCBs improved from 0.2 per cent at end-March 2020 to 0.7 per cent at end-March 2021, aided by stable income and decline in expenditure, the RBI report said.
During the financial year 2020-21, the consolidated balance sheet of SCBs expanded in size, notwithstanding pandemic and resultant contraction in the economic activity.
As per the RBI, in 2021-22 so far, the "nascent signs of recovery" are visible in credit growth. Deposits grew by 10.1 per cent at Sept-end as compared to 11 per cent in the year ago period, the central bank said.
The report said capital to risk weighted assets (CRAR) ratio of SCBs strengthened from 14.8 per cent at end-March 2020 to 16.3 per cent at end-March 2021 and further to 16.6 per cent at end-September 2021, partly aided by higher retained earnings, recapitalisation of public sector banks (PSBs) and capital raising from the market by both PSBs and private sector banks (PVBs).
The RBI said some policy measures taken by the RBI in response to the COVID-19 pandemic reached the pre-announced sunset dates in 2021-22. “Certain liquidity measures have been wound down as a result, while other regulatory measures, including deferment of implementation of net stable funding ratio (NSFR), restrictions on dividend payouts by banks, deferment of implementation of the last tranche of capital conservation buffer, have been realigned to avoid extended forbearance and risks to financial stability while providing targeted support to needy sectors," the RBI report said.
The central bank said even though initiation of fresh insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) was suspended for a year till March 2021, it constituted one of the major modes of recovery in terms of amount recovered.
The RBI said the balance sheet growth of urban co-operatives banks (UCBs) in 2020-21 was driven by deposits, while subdued credit growth led to acceleration in investments. “Their financial indicators, including capital position and profitability, improved," the RBI said, adding that profitability of state co-operative banks and district central co-operative banks improved in 2019-20, while their asset quality deteriorated.
The RBI said the consolidated balance sheet of NBFCs expanded during 2020-21, driven by credit and investments of non-deposit taking systemically important NBFCs. “Their asset quality and capital buffers also improved," the central bank said.
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Gross NPAs of scheduled commercial banks down to 6.9% in Q2 FY22: RBI - Mint
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