Bad Assets

The Reserve Bank on Thursday said net non-performing assets ratio of banks declined to a multi-year low of 0.8 per cent at the end of September 2023 and the country's domestic financial system remains resilient. "The resilience of the non-banking financial companies (NBFCs) sector improved with CRAR at 27.6 per cent, GNPA ratio at 4.6 per cent and return on assets (RoA) at 2.9 per cent, respectively, in September 2023," said the RBI's Financial Stability Report (FSR). The gross non-performing assets (GNPA) ratio of banks also declined to a multi-year low of 3.2 per cent, it said. The report reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability and the resilience of the Indian financial system. It further said that the capital to risk-weighted assets ratio (CRAR) and the common equity tier 1 (CET1) ratio of scheduled commercial banks (SCBS) stood at 16.8 per cent and 13.7 per cent, respective

They are mostly loss-making, with growing bad assets so the agricultural sector prefers commercial banks

They have been losing business as the IBC process picks up pace

Only a few large cases see good recovery and the average time taken for resolution is 419 days.

New framework likely to be introduced even before default happens

Some private sector banks have resorted to under-reporting of their bad assets