Bad Loans Have Declined To 4.41%: RBI Governor

Reserve Bank of India Governor Shaktikanta Das has stated that Indian banks have demonstrated resilience, with a significant reduction in bad loans.

According to Das, the banks' gross non-performing assets ratio dropped to 4.41% by the end of 2022, marking the lowest level since March 2015. This compares favourably with the 5.8% recorded at the end of March 2022 and 7.3% as of March 31, 2021.

According to a Bloomberg report, the banks' capital adequacy ratio as of December was 16.1%, which is comfortably above the regulatory requirement. Das made these remarks while speaking at a conference on global financial resilience.

"Macro stress test for credit risk imply that Indian banks would be able to comply with the minimum capital requirement even under severe stress situations," Das added in the web-streamed address. Indian banks have "remained resilient and not been affected by the recent sparks of financial instability seen in some advanced economies," he asserted.

The recent banking crises in the US and Europe, however, show that dangers can arise in banks even when they are thought to be relatively stable, according to the head of the Indian central bank. "Hence, we expect the management and the board of directors of each bank to continually assess the financial risk and focus on building up adequate risk and capital buffers even beyond the minimum regulatory requirement."

According to Das, the RBI is placing increased emphasis on banks' adapted business models. While closely monitoring banking liquidity, the central bank refrains from meddling in banks' operations but requires immediate corrective measures whenever it identifies any deficiencies that require resolution.