Bank’s NPA i.e. bad debt has reached the lowest level of 10 years.
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Shaktikanta Das believes that financial stability is important and all stakeholders have to work together to safeguard it. Stating that there is a need to be cautious amidst the failure of some banks abroad, he said that the regulators of the financial sector are keeping a close watch on the banking sector. The NPA burden within the banking system increased significantly in the second half of the last decade. To control the situation, RBI had made it mandatory for banks to mark down non-performing assets as well as introducing asset quality review.
Profits of public sector banks increased
The impact of this exercise was also visible in the stability report released on Wednesday. The net NPA of banks stood at one per cent at the end of March. Earlier this level was in July, 2011. The share of corporate loans fell to 46.4 per cent in March 2023 from 51.1 per cent in March 2020 due to increased focus of banks on retail lending. Apart from this, the share of large loans in total gross NPAs also declined from 75.7 per cent three years ago to 53.9 per cent in March 2023. The profits of public sector banks have grown faster than those of private sector banks.
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