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Banking Sector Improves As NPAs Recede For The First Time Since 2015

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The Reserve Bank of India (RBI) believes that Indian banks are set on a course to recovery after the tightening norms imposed on them. In a report, the central bank said that the non-performing asset (NPA) burden of both private and public sector banks has been seen declining for the current fiscal year for the first time since 2015.

Banking Sector Improves As NPAs Recede For The First Time Since 2015
 

As per RBI's forecast, the gross bad loans will be down to 10.3 percent in March 2019 from 10.8 percent in September 2018 and 11. 5 percent in March 2018. There was a decline in net NPA as well.

In RBI's 18th Financial Stability Report, the first one since Shantikanta Das became the governor, the central bank said, "In a sign of possible recovery from the impaired asset load, the GNPA (gross non-performing assets) ratio of both public and private sector banks showed a half-yearly decline, for the first time since March 2015, the financial year-end prior to the launch of asset quality review."

It further said that the asset quality of the banks, measured by banking stability indicator (BSI) has been seen improving despite falling profits.

In 2015, RBI conducted an asset quality review and made banks reclassify their many standard loans as bad assets. The loans had to be shown as 'standard' by either evergreening or restructuring on terms that were impossible to achieve.

Read more about: banking
Story first published: Tuesday, January 1, 2019, 12:34 [IST]
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