RBI’S FINANCIAL STABILITY REPORT HIGHLIGHTS
Why in the News?
- RBI’s financial stability reports highlights , Healthy balance sheets of financial institutions, moderating inflation, and fiscal consolidation contribute to stability.
Source: The Hindu
Key Highlights:
- Gross Non-Performing Assets (GNPA) ratio reaches a multi-year low at 3.2%, and net non-performing assets (NNPA) ratio stands at 0.8% in September 2023.
- Stress tests projects , Capital to Risk-weighted Assets Ratio (CRAR) at 14.8% in September 2024.
- GNPA ratio for all banks may improve to 3.1% by September 2024 under baseline scenarios.
About Financial Stability Report:
- The FSR is a report released by RBI that reflects the combined evaluation of the Sub-Committee of the Financial Stability and Development Council (FSDC), led by the RBI Governor.
- Released biannually.
- Provides an assessment of risks to financial stability and evaluates the resilience of the financial system.
Key Terms
Non-Performing Asset (NPA) · NPA categorizes loans or advances in default or arrears on scheduled payments. · Debt is marked as non-performing when payments remain overdue for at least 90 days. · GNPA : Gross non-performing assets represent the total defaulted loans acquired from financial institutions. · NNPA : Net non-performing assets are the realized amount after deducting provisions from the gross non-performing assets. Capital Adequacy Ratio (CAR) · CAR, or Capital-to-Risk Weighted Asset Ratio, is the ratio of a bank’s capital to its risk-weighted assets and current liabilities. · Decided by central banks, it prevents excessive leverage by commercial banks, safeguarding against insolvency risks. |