Annual Report of Reserve Bank of India

29 May 2021 Current Affairs:The Reserve Bank released the annual report. It emphasized that “the quality of the bank’s assets and its readiness need to be closely monitored to ensure that reserves increase in the next few quarters. 

Highlights:
♦ The Reserve Bank of India, early in its semi-annual financial stability report, sometimes emphasized that by September 2021, under benchmark pressure, banks’ non-performing loan ratio may rise to 13.5%. 
♦ In its report, the Reserve Bank of India warned: “Banks as lenders will have to provide real non-performing loans. After the Supreme Court (SC) lifted the moratorium on the classification of non-performing assets in March 2021.
♦ According to it, all loan accounts suspended between March and August 2020 will be exempt from compound interest, which will pressure the bank’s financial situation.
♦ The bank’s total net non-performing assets ratio fell from 8.2% in March 2020 to 6.8% in December 2020.
♦ The Bank’s Provision Coverage Ratio (PCR) increased from 66.6% in March 2020 to 75.5% in December 2020. This was due to banks’ careful provision of higher than required provisions during the suspension and restructuring of regulatory requirements. Provisions.
♦ By December 2020, the bank’s capital-to-risk-weighted asset ratio (CRAR) has increased to 15.9%, from 14.8% in March.
♦ The total net non-performing assets of non-bank financial institutions increased from 6.8% in March to 5.7% in December 2020. The capital adequacy ratio of NBFC increased from 24.8% in December 2020 to 23.7% in March.