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Economy
Mahesh

04/07/22 05:35 AM IST

RBI Financial Stability Report

In News 
  • Reserve Bank of India (RBI) released its bi-annual Financial Stability Report (FSR).
Major Highlights 
  • The asset quality of the banking system has improved with the gross non-performing assets (GNPA) ratio declining from 7.4 per cent in March 2021 to a six-year low of 5.9 per cent in March 2022.
  • Reason: Banks have reduced the GNPA ratio through recoveries, write-offs and reduction in slippages.
  • Provisioning coverage ratio (PCR): It improved to70. 9 per cent in March 2022 from 67.6 per cent a year ago.
  • PCR is the percentage of funds that a bank sets aside for losses due to bad debts. A high PCR can be beneficial to banks to buffer themselves against losses if the NPAs start increasing faster.
  • Buffer to withstand shocks: According to the RBI’s report, banks, as well as non-banking financial institutions, have sufficient capital buffers to withstand shocks, and support from it during Covid helped banks arrest their GNPA ratio.
  • The report cautioned that the advent of fintech has exposed the banking system to new risks such as safeguarding of data privacy, cyber security, consumer protection, competition and compliance with AML (anti-money laundering) policies.
  • RBI Governor termed cryptocurrencies as a “clear danger” and anything that derives value based on make-believe, without any underlying, is just “speculation under a sophisticated name”.
Source- PIB 

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