NPA in Banking- The Bank’s gross NPA can reach 9.9% by September 2020
The RBI said in the Financial Stability Report (FSR) that in September 2020, banks’ gross NPAs could reach 9.9%. It was 9.3% in September this year. On Friday, the RBI released an FSR. It added that the NPA should increase due to changing economic conditions and the decline in credit growth. Under pressure, the gross NPAs of public sector banks could drop from 12.7% to 13.2%. Private banks’ NPAs are expected to drop from 3.9% to 4.2% which are some changes in NPA in Banking system.
RBI asked banks to improve the operating system
Reserve Bank of India Governor Shaktikanta Das has called on Indian businesses, including banks, to improve the operating system to increase efficiency at the full economic potential. Das said this amid growing concern over the decline in economic growth. He also said that being cautious about the impact of global financial markets, consumption and investment are two major challenges.
RBI Governor Warns of Cobra Effect
Das said in the role of the 20th edition of the Financial Stability Report: “All regulators of the Financial Stability and Development Board are making efforts to build confidence in the financial system. In my view, this is an important factor in increasing efficiency based on the full potential of the economy. Das also warned against the “cobra effect”. This situation occurs when the problem becomes more horrible due to the attempted solution. “Interest rates have fallen so much due to extraordinary monetary stimulus that this level has not yet been observed in developed countries, as inflation remains low for long periods. However, there are obstacles to multilateral trade, “he said. And the emergence of emerging geopolitical uncertainties could affect global financial markets.
Credit growth set to hit six-decade low: ICRA
According to the rating agency ICRA, the growth rate of loan disbursements could drop from a low of 6.5 years to 6.5% during the current year. The growth rate of loan disbursements was 13.3% in the most recent year. The agency said that due to the sluggish economic growth rate, low operational capital requirements and increased vigilance between banks and financial institutions during the 2019-2020 fiscal year, the growth rate of loan disbursements could be affected. According to the report, the disbursement of loans until December 6 of the current fiscal year increased only by Rs 80,000 crore. During the same period in fiscal years 2018-19 and 2017-18, there was an increase of Rs 5.4 lakh crore and Rs 1.7 lakh crore respectively.