The asset quality of banks showed improvement with gross non performing assets' (GNPAs) ratio declining to 10.8 per cent in September 2018 from 11.5 per cent in March 2018, a Reserve Bank of India (RBI) report said Monday. The net NPAs ratio also witnessed a fall at 5.3 per cent in September 2018 as against 6.2 per cent in March 2018, RBI said in its Financial Stability Report. "In a sign of possible recovery from the impaired asset load, the GNPA ratio of both public and private sector banks showed a half-yearly decline, for the first time sinceMarch 2015, the financial year-end prior to the launch of asset quality review (AQR)," the report said.
GNPAs of state-run lenders improved to 14.8 per cent in September 2018 from 15.2 per cent in March 2018, the report said. Private sector banks saw gross NPAs falling to 3.8 percent in September 2018 from 4 per cent in March 2018.
The report also tested the resilience of the banking system against macroeconomic shocks through macro-stress tests for credit risk. Under the baseline scenario, the GNPA ratio of allbanks may come down to 10.3 per cent by March 2019 from 10.8 per cent in September 2018, the report said.
The GNPA ratio of state-run lenders may decline from 14.8 per cent in September 2018 to 14.6 per cent by March 2019 under baseline scenario, whereas private sector banks' GNPA ratio may decline from 3.8 per cent to 3.3 per cent in March 2019, the report said.
Foreign banks' GNPA ratio under baseline scenario might decline to 3.1 per cent in March 2019 from 3.6 per cent in September 2018, it said.
The report said the ratio of restructured standard advances (RSAs) steadily declined in September 2018 to 0.5 per cent following the withdrawal of various restructuring schemes in February 2018. "This suggested increasing shift of the restructured advances to NPA category," the report said.
As of September 2018, provision coverage ratio (PCR) of all banks was higher as compared to 51 per cent in March 2018, with improvements noticed for both state-run banks and private sector banks, the report said. Distribution of banks GNPA ratio shows that the number of banks having GNPA ratio less than 10 per cent has gone down in September 2018 as compared to March 2018, the report said.
The capital to risk-weighted assets ratio (CRAR) of banks declined marginally from 13.8 per cent in March 2018 to 13.7 per cent in September 2018, it said.
The CRAR of state-run banks declined from 11.7 percent to 11.3 per cent, the report said. The asset quality of the industry sector improved to 5 per cent in September 2018 compared to 13.6 per cent in March 2018, while that of agriculture and retail sectors declined to 6.3 per cent and 2.3 per cent respectively in September 2018, it said.
The share of large borrowers in total loan portfolios of banks and their share in GNPAs was at 54.6 per cent and 83.4 per cent respectively at the end of September 2018, the report said. The top 100 large borrowers accounted for 16 per cent of the gross advances and 21.2 per cent of GNPAs of banks, the report said.