GNPA ratio may rise up to 11.2% in FY22: RBI

GNPA ratio may rise up to 11.2% in FY22 : RBI

Subject : Economy

Context : The gross non-performing asset ratio (GNPA) of India’s scheduled commercial banks (SCBs) may climb by the end of the current fiscal year to as much as 11.2% under a severe stress scenario, from 7.48% in March 2021, the Reserve Bank of India (RBI) said in its Financial Stability Report on Thursday.

Concept :

• Macro stress tests indicate that the GNPA ratio of SCBs may increase to 9.8% by March 2022 under the baseline scenario; and to 11.22% under a severe stress scenario, although SCBs have sufficient capital, both at the aggregate and individual level, even under stress, the RBI said.
• The capital to risk-weighted assets ratio of SCBs increased to 16.03% and the provisioning coverage ratio stood at 68.86% in March 2021,the central bank said.

Financial Stability report

• The FSR is a hugely useful publication as it receives contributions from all the financial sector regulators in the country.
• As such, it provides a rather comprehensive picture of the so-called macro-financial risks facing the economy.
• The FSR released by the RBI is the biannual alert of such risks in the Indian economy.

GNPA

• Gross NPA stands for the Gross Non-Performing Assets. Gross NPA is the term used by commercial banks that refer to the sum of any unpaid debt, which is classified as non-performing loans.