RBI Financial Stability Report
The Reserve Bank of India recently released to the financial stability report for December 2020. This is the 22nd issue of financial stability report of the apex bank. It is released twice a year.
Key Findings of the Financial Stability Report of RBI
- The Gross non-performing assets ratio of the scheduled commercial banks is to increase to 13.5% by September 2021.
- The net NPA and GNPA ratios continue to decline. The GNPA ratio stood at 7.5% in September 2020. On the other hand, the NNPA the ratio stood at 2.1 % in September 2020 and at 3% in March 2020.
- According to the financial stability report, the GNPA might increase to 13.5% by September 2021 under baseline scenario. Under severe stress scenario, the GNPA ratio might increase to 14.8% by September 2021.
- According to the the July 2020 financial stability report prediction GNPA was to increase from 8.5 % in March 2020 to 12.5% by March 2021. Also, the July 2020 financial stability report predicted that the GNPA ratio was to increase to 14.7 % under severe stress test scenario.
- The loans to corporate have grown to multi quarter high of 5.65 % in March 2020 quarter.
- The financial stability report says that the long-standing trend of private and public sector banks have been reversed. According to the report, the private bank credit has grown rapidly and the public sector bank credit has declined.
What is GNPA?
Gross Non-Performing Assets.
What is NNPA?
Net Non-Performing Assets.
What is the difference between GNPA and NNPA?
The GNPAs are the summation of all the loan assets that are classified as non performing asset under RBI guidelines. The NNPA subtracts the provisions made by the banks from the gross NPA. Therefore, only NNPA gives the exact value of the non-performing assets.
Who releases Financial Stability Report?
The RBI Financial Stability Report is released by the Financial Stability and Development Council. The idea of the council was mooted by Raghuram Rajan Committee in 2008. The Union Finance Minister is the chairperson of the Financial Stability and Development Council. The other members include RBI Governor and other senior officials of RBI.