The RBI has issued its FSR, a biannual publication representing the collective evaluation of the Financial Stability and Development Council (FSDC) sub-committee on the threats to financial stability and financial system resilience.

Highlights Of The Report:

• Increase In NPA: The gross non-performing assets (GNPA) ratio of all scheduled commercial banks (SCBs)  can increase from 8.5 per cent in March 2020 to 12.5 per cent by March 2021.
• Scheduled Commercial Banks’ capital to risk-weighted assets ratio (CRAR) edged down to 14.8 percent in March, from 15 percent in September 2019.
• Under the baseline scenario, this ratio could drop to 13.3 percent in March 2021 and to 11.8 percent under a very extreme stress scenario.
• Bank credit, which had declined dramatically during the first half of 2019-20, fell further down in the following period with the moderation being wide-ranging across bank classes.
• Total bilateral exposures among financial system entities decreased marginally during 2019-20; with the continuing shrinkage of the inter-bank market and better capitalization of public sector banks (PSBs), contagion losses to the banking system will decrease in different scenarios over the previous year.