MUMBAI: The asset high quality of Indian banks is at a decadal excessive, however as deposit charges meet up with lending charge will increase, profitability may average in FY24, RBI mentioned in a report. The central financial institution additionally expressed concern over the dependence of finance firms on banks for funding.
In its annual publication, ‘Report on Pattern and Progress of Banking in India 2022-23’, RBI mentioned that the gross non-performing belongings of banks fell to a decadal low of three.9% as of March-end 2023 and additional to three.2% on the finish of September this 12 months.
“The Indian banking system is effectively positioned to enhance additional, with higher asset high quality, excessive capital adequacy and sturdy profitability. The monetary indicators of NBFCs are additionally set to strengthen additional,” the report mentioned. It attributed 45% of the advance within the ratio of NPAs to recoveries and upgradations.
The RBI report mentioned the consolidated stability sheet of banks grew by 12.2% in 2022-23 — the very best in 9 years. The share of PSBs within the consolidated stability sheet of banks declined from 58.6% on the finish of March 2022 to 57.6% on the finish of March 2023, whereas non-public banks gained a share from 34% to 34.7%. On the finish of March 2023, PSBs accounted for 61.4% of complete deposits and 57.9% of complete advances.
“With inflation remaining above goal, financial coverage may keep in restrictive territory for longer,” the report mentioned. On the rising dependence of NBFCs on banks for finance, the report mentioned, “Given the rising interconnectedness between banks and NBFCs, the latter ought to give attention to broad-basing their funding sources and cut back overdependence on financial institution funding. Banks and non-banks each want to usher in larger empathy of their buyer companies.”
“The share of unsecured advances in complete advances has elevated. On this context, RBI focused macroprudential measures of November 2023 are aimed toward guaranteeing sustained monetary stability whereas supporting progress,” the report mentioned.
The central financial institution has additionally raised issues over banks’ lending to debtors who can affect the lender’s choice because it includes ethical hazard points resulting in compromise in pricing and credit score administration.
In its annual publication, ‘Report on Pattern and Progress of Banking in India 2022-23’, RBI mentioned that the gross non-performing belongings of banks fell to a decadal low of three.9% as of March-end 2023 and additional to three.2% on the finish of September this 12 months.
“The Indian banking system is effectively positioned to enhance additional, with higher asset high quality, excessive capital adequacy and sturdy profitability. The monetary indicators of NBFCs are additionally set to strengthen additional,” the report mentioned. It attributed 45% of the advance within the ratio of NPAs to recoveries and upgradations.
The RBI report mentioned the consolidated stability sheet of banks grew by 12.2% in 2022-23 — the very best in 9 years. The share of PSBs within the consolidated stability sheet of banks declined from 58.6% on the finish of March 2022 to 57.6% on the finish of March 2023, whereas non-public banks gained a share from 34% to 34.7%. On the finish of March 2023, PSBs accounted for 61.4% of complete deposits and 57.9% of complete advances.
“With inflation remaining above goal, financial coverage may keep in restrictive territory for longer,” the report mentioned. On the rising dependence of NBFCs on banks for finance, the report mentioned, “Given the rising interconnectedness between banks and NBFCs, the latter ought to give attention to broad-basing their funding sources and cut back overdependence on financial institution funding. Banks and non-banks each want to usher in larger empathy of their buyer companies.”
“The share of unsecured advances in complete advances has elevated. On this context, RBI focused macroprudential measures of November 2023 are aimed toward guaranteeing sustained monetary stability whereas supporting progress,” the report mentioned.
The central financial institution has additionally raised issues over banks’ lending to debtors who can affect the lender’s choice because it includes ethical hazard points resulting in compromise in pricing and credit score administration.
