The gross non-performing asset (GNPA) ratio of scheduled commercial banks (SCBs) fell to a seven-year low of 5.0 per cent, the Reserve Bank of India (RBI) said in its financial stability report (FSR). The net non-performing assets (NNPA) have dropped to ten-year low of 1.3 per cent in September 2022. Macro stress tests for credit risk reveal that SCBs would be able to comply with the minimum capital requirements even under severe stress scenarios, the report stated. The system-level capital to risk weighted assets ratio (CRAR) in September 2023, under baseline, medium and severe stress scenarios, is projected at 14.9 per cent, 14.0 per cent and 13.1 per cent, respectively. Stress tests for open-ended debt mutual funds showed no breach in limits pertaining to interest rate, credit and liquidity risks, the FSR stated. Meanwhile, RBI report said that the global economy is facing formidable headwinds with recessionary risks looming large. The interplay of multiple shocks has resulted in tightened financial conditions and heightened volatility in financial markets. The Indian economy is confronting strong global headwinds. Yet, sound macroeconomic fundamentals and healthy financial and non-financial sector balance sheets are providing strength and resilience and engendering financial system stability.
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