• UGI USER
  • Jun 28, 2024
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GNPA) RATIO OF SCHEDULED COMMERCIAL BANKS REACHED A 12-YEAR LOW

Why in the news?

  • The Reserve Bank of India’s Financial Stability Report for June 2024 highlights that the gross non-performing assets (GNPA) ratio of scheduled commercial banks reached a 12-year low of 2.8% in March 2024.
  • The GNPA ratio is projected to further improve to 2.5% by March 2025, based on macro stress tests assessing banks’ resilience to economic shocks.
Source: Startupchallenge

Current GNPA and NNPA Status

  • The GNPA ratio of scheduled commercial banks recorded a sustained improvement, moderating to 2.8% in March 2024.
  • The net non-performing assets (NNPA) ratio also improved to a record low of 0.6%, reflecting enhanced asset quality.

About Financial Stability Report :

  • The Financial Stability Report is released by the RBI twice a year.
  • It details the state of financial stability in the country, incorporating inputs from all financial sector regulators.
Key Terms:

NPA (Non-Performing Asset)

  • An NPA is a loan or advance for which the principal or interest payment remains overdue for 90 days or more, indicating that the borrower is unable to meet their debt obligations.

GNPA (Gross Non-Performing Asset)

  • GNPA represents the total value of non-performing assets in a bank’s loan portfolio before any provisions or write-offs. It reflects the overall extent of bad loans without accounting for the bank’s loss coverage.

NNPA (Net Non-Performing Asset)

  • NNPA is the value of non-performing assets after deducting provisions and write-offs. It provides a clearer picture of the actual risk of loss a bank faces from bad loans.

Associated Article:

 https://universalinstitutions.com/improvement-in-bank-npas/