Macro-stress tests for credit risk show that under the baseline scenario, Scheduled Commercial Bank's Gross Non Performing Assets Could rise in 2020, the RBI has stated in its Financial Stability Report.
"GNPA ratio may increase from 9.3 per cent in September 2019 to 9.9 per cent by September 2020 primarily due to change in macroeconomic scenario, marginal increase in slippages and the denominator effect of declining credit growth," the RBI report has said.
Exports to face headwinds
"While the outlook for capital inflows remains positive, India's exports could face headwinds in the event of sustained global slowdown but current account deficit is likely to be under control reflecting muted energy price outlook," the report said.
The country's central bank has also noted that reviving the twin engines of consumption and investment while being vigilant about spillovers from global financial markets remains a critical challenge going forward.
Financial Institutions: Performance and risks
Scheduled Commercial Banks (SCBs) capital adequacy ratio improved significantly after the recapitalisation of public sector banks (PSBs) by the Government. "Provision Coverage Ratio (PCR) of all SCBs rose to 61.5 per cent in September 2019 from 60.5 per cent in March 2019 implying increased resilience of the banking sector," the Financial Stability Report has noted.