NEW DELHI: The Reserve Bank of India (RBI) on Thursday said scheduled commercial banks are well capitalised and are capable of absorbing macroeconomic shocks even in absence of any further capital infusion.
The central bank in its Financial Stability Report released on Thursday also showed that the Indian banking system is comfortably placed as far as asset quality is concerned. The report says under the baseline scenario, aggregate minimum capital requirement ratio of 46 major banks likely to drop from 16.6% in September 2023 to 14.8% by September 2024.
“It may go down to 13.5% in the medium stress scenario and to 12.2% under the severe stress scenario by September 2024, which would also remain above the minimum capital requirements,” said the report.
The report reiterated that no banks would breach the minimum capital requirement of 9% in the next one year. On asset quality, it shows gross non-performing assets (GNPA) of banks would go up to a level of 5.1% under severe stress condition. As per the report, under the baseline scenario, the GNPA ratio of all banks may improve to 3.1% by September 2024 from current level of 3.2%. Under medium stress scenario, the ratio may rise to 3.6%.
“At the bank group level, GNPA ratios of public sector banks may swell from 4.4% in September 2023 to 5.1% in September 2024, whereas it may go up from 2.1% to 3.6% for domestic private banks and from 1.6% to 1.8% for foreign banks under the severe stress scenario.”
The RBI in its banking trend report for 2022-23 released on Wednesday said banks’ asset quality has improved to a decadal high by the end of September 2023 quarter. As per the report, amount of NPAs fell for all bank groups, except small finance banks.
Financial Stability report says the improvement in banks’ asset quality has been broad-based. The GNPA of the agriculture sector remains high at 7%, while asset quality in the personal loans segment has improved at an overall level even if there has been a marginal impairment in credit card receivables. The share of large borrowers (with total exposure of Rs 5 crore and above) in total advances declined to 44.5% at end-September 2023 from 47.8% at the end of March 2022.
‘SBI, HDFC, ICICI Bank systemically important’
NEW DELHI: The RBI on Thursday said SBI, HDFC Bank and ICICI Bank are Domestic Systemically Important Banks (D-SIBs), which are ‘too big to fail’. The D-SIB Framework requires the RBI to disclose names of banks designated as D-SIBs every year, starting from August 2015. The framework requires that D-SIBs may be placed in four buckets depending upon their Systemic Importance Scores (SISs). ENS