Bank balance sheet recovery

Asset quality is improving, but risks remain

Asset quality in the banking system continues to improve. As the latest Report on Trend and Progress of Banking in India, by the Reserve Bank of India (RBI), showed, the gross non-performing assets (GNPAs) ratio in scheduled commercial banks declined from 8.2 per cent in March 2020 to 7.3 per cent in March 2021. According to the RBI’s estimates, the ratio is expected to have declined to 6.9 per cent by end-September 2021. The financial results declared by banks for the December 2021 quarter suggest that the banking sector balance sheet continues to improve. As a report in this newspaper