India’s domestic financial system is in much stronger position now
MUMBAI: The Reserve Bank of India (RBI) governor, Shaktikanta Das, called upon India’s financial institutions to build their own systems to be future-ready and resilient against crisis.
He said financial institutions should be equipped to take on any crisis in the future, and this is the right time to initiate steps towards building their own systems.
“It has to be a key element of their organizational culture,” he added. Das was speaking at a function organized by College of Supervisors (CoS) in Mumbai on Thursday (June 20).
He said the ethos of being future-ready and resilient against crisis needs to be built into every financial institution. “It has to be developed proactively when the system is healthy rather than reactively when there may not be enough headroom to strategise and implement,” added.
He stated that all stakeholders in India, namely, the Reserve Bank, the banks and non-banking financial companies (NBFCs), and the government have made tangible efforts in this direction.
India’s domestic financial system is now in a much stronger position, characterised by robust capital adequacy, low levels of non-performing assets, and healthy profitability of banks and NBFCs.
Strongly placed
The gross non-performing assets (GNPA) ratio for the scheduled commercial banks (SCBs) was 2.74 per cent at end March 2024, down from 3.87 per cent as on March 31, 2023 and 5.82 per cent as on March 31, 2022.
The capital to risk weighted assets ratio (CRAR) at 16.8 per cent at end March 2024 is also much above the minimum regulatory requirement.
The gross NPA (GNPA) ratio of NBFCs was 3.96 per cent at end March 2024, down from 5.03 per cent at end March 2023, and 6.29 per cent at end March 2022.
Their capital to risk-weighted asset ratio (CRAR) at 26.58 per cent at end March 2024 is also well above the minimum regulatory requirement for NBFCs.
“I am happy to note that at the systemic level, there has been significant improvement in compliance culture in our financial system,’ Das said adding that there is, however, no room for complacency.
“We must keep constant vigil and continue to take proactive measures to sustain this progress,” he added.
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