Scheduled commercial banks’ (SCBs) net non-performing assets (NPA) ratio fell to a 10-year low of 3.9 per cent in March 2023, the Reserve Bank of India (RBI) noted in the latest edition of its Financial Stability Report released on Wednesday. 

“Macro stress tests for credit risk reveal that SCBs are well capitalised and all banks would be able to comply with the minimum capital requirements even under adverse stress scenarios,” it said. 

Gross and net NPA ratios have fallen from a high of 11.5 per cent and 6.1 per cent in March 2018 to 3.9 per cent and 1.0 per cent in March 2023 respectively. 

RBI noted that certain pockets of Non-Banking Financial Intermediaries (NBFIs) had high leverage, positing systemic concerns. “Elevated levels of off-balance sheet financial leverage indicate that overall synthetic leverage may be approaching historic highs,” the RBI said. 

Since the last issue of FSR was published, trajectories of global and Indian financial systems' growth had changed, RBI Governor Shaktikanta Das wrote.  

“The global financial system has been impacted by significant strains since early March 2023 from the banking turmoil in the US and Europe. In contrast, the financial sector in India has been stable and resilient, as reflected in sustained growth in bank credit, low levels of non-performing assets and adequate capital and liquidity buffers," he said.