Finance Minister Nirmala Sitharaman has tabled the country’s Economic Survey 2021-22 today. Here is what the survey said about the banking sector.
· Overall, stressed advances ratio of scheduled commercial banks (SCBs) increased from 7.9% as on September 30, 2020 to 8.5% as on September 30, 2021
· Various COVID-19 related dispensations/moratoriums provided with respect to asset quality contributed towards increase in restructured assets and, as a result, stressed advances ratio for the banking system increased by September 30, 2021
· Gross non-performing asset (NPA) ratio of public sector banks (PSBs) decreased from 9.4% at end-September 2020 to 8.6% at end-September 2021
· The stressed advances ratio of PSBs increased marginally from 10.0% to 10.1% during the same period on account of a rise in restructured advances
· Capital adequacy ratio has continued to improve since 2015-16. Capital to risk weighted asset ratio (CRAR) of SCBs increased from 15.84% at end-September 2020 to 16.54% at end-September 2021 on account of improvement for both public and private sector banks
The banking system is well capitalized and the overhang of NPAs seems to have structurally declined even allowing for some lagged impact of the pandemic.
(This is a developing story)
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