Why is it in the news?

• In the second quarter of FY24, the Gross Non-Performing Assets (GNPA) ratio of Indian scheduled commercial banks (SCBs) experienced a continuous improvement, reaching a decadal low, as reported by the Reserve Bank of India’s ‘Trend and Progress of Banking in India’

Key Findings of RBI Report

• The asset quality of Indian scheduled commercial banks (SCBs) showed consistent improvement from the fiscal year 2018-19 to 2022-23, as indicated by Gross Non-Performing Assets (GNPA) ratios.
• The GNPA ratio for SCBs dropped to 3.9% in March 2023 and further decreased to 3.2% in September 2023, marking a decade-low in non-performing assets.
• About 45% of the decline in SCBs’ GNPA during 2022-23 was attributed to recoveries and upgradations, reflecting positive trends in asset recovery.
• In the fiscal year 2022-23, the consolidated balance sheet of SCBs (excluding Regional Rural Banks) witnessed a significant 12.2% growth, the highest in nine years. The primary driver of this expansion on the asset side was the rapid growth of bank credit, reaching its fastest pace in over a decade.
• Non-Banking Financial Companies (NBFCs) experienced a 14.8% expansion in their consolidated balance sheet during the fiscal year 2022-23, driven by double-digit credit growth.
• The RBI emphasized the role of qualitative metrics, including improved disclosures, robust code of conduct, and transparent governance structures, in contributing to financial stability.