look news india
Economic experts analyzing the central bank’s report said banks have piled up bad loans in recent years, painting a rosy picture of balance sheets. Also, while reviewing the answers to the questions sent to the Reserve Bank under the Right to Information Act, it was revealed in a report of the Central Bank that there has been an increase in loan write-offs by the banks. It has been claimed that the financial position of the banks has strengthened.
A report by the Reserve Bank of India (RBI) has claimed that the financial position of the Indian banking sector is strengthening as bank deposits and loans have increased and bad loans have also declined. The report also said that the gross bad loan ratio has fallen to a multi-year low. The gross non-performing asset ratio (NPA) of banks, or the ratio of bad assets to total loans, has declined from 2.7 per cent at the end of March to 2.5 per cent at the end of September. Which is the lowest level in 13 years. Net bad loans of banks stood at 0.57 per cent of total loans at the end of September. Which was 0.62 percent at the end of March. This is driven by strong loan-loss buffers. The report further claims that the asset quality of non-banking financial companies (NBFCs) has also improved further amid double-digit balance sheet growth in 2023-24. Last year, RBI had warned the financial sector against all forms of abuses. Along with this, the rules of credit card and personal loan were also made strict. Borrowing from banks was made expensive for non-banking financial companies. In particular, banks have cleaned up their balance sheets in recent years by selling or writing off bad loans to asset reconstruction companies. According to the RBI report, their capital and liquidity buffers were well above regulatory requirements. While profitability improved for the sixth consecutive year in the financial year 2023-24. Going forward, banks need to strengthen their risk management and IT governance standards and curb unethical activities, including suspicious and unusual transactions, the RBI said. Highlighting the need for a strong risk management framework, RBI said, a growth at any cost approach is essential for NBFCs. Non-banking lenders need to strengthen customer complaint procedures.
