“Trend and Progress of Banking in India” Report

India’s banking sector demonstrated continued positive momentum in recent quarters, with falling bad loans, profitable growth and adequate capital buffers.

Declining Bad Loan Ratio

The non-performing asset (NPA) ratio of scheduled commercial banks dropped to a 10-year low of 3.2% by September 2022. This figure was 3.9% in March.

NPA reductions stemmed nearly equally from recoveries and upgrades versus write-offs. Lower NPAs indicate improving bank health.

Robust Balance Sheet Growth

Combined scheduled bank balance sheets expanded 12.2% in 2022-23 – the fastest in 9 years. Topping $2.2 trillion, growth was powered by double-digit credit expansion amid high demand.

Urban cooperative banks’ balance sheets also rose 2.3%, led by lending. Non-banking financial companies likewise saw 15% asset growth.

Bolstered Resilience Metrics

Alongside asset expansion, banks augmented buffers:

RBI: Banks Well-Positioned, Must Guard Against Risks

The Reserve Bank of India stated banks are now well-placed with strengthened finances. But it advised maintaining vigilance around cyber threats, unsecured retail loans and over-reliance of shadow banks on bank funding.

Prudent risk management and governance practices will underpin resilient, inclusive growth.



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