Key highlights of the Financial Stability Report(DEC 2019)

  • Scheduled commercial banks’ credit growth remained subdued at 8.7 per cent year-on-year (YoY) in September 2019.
  • Banks’ capital adequacy ratio improved significantly after the recapitalisation of public sector banks (PSBs) by the government.

  • Continuing the trend witnessed in the previous half-year, the banking sector has shown signs of stabilisation.
  • Performance of public sector banks needs to improve, they need efforts to build buffers against disproportionate operational risk losses.
  • Private sector banking space also needs to focus on aspects of corporate governance.
  • Non-banking financial intermediation space continues to show signs of restructuring of their underlying business models.
  • While credit markets are becoming more competitive following recapitalisation of PSBs, market funding for NBFCs getting more discerning.
  • Insolvency and Bankruptcy Board of India (IBBI) continues to make steady progress in the resolution of stressed assets.
  • India’s financial system remains stable notwithstanding weakening domestic growth.
  • The performance of scheduled urban cooperative banks (SUCBs) deteriorated significantly between March and September.
  • With global growth and trade projected to slow down further, India’s exports could face challenging demand conditions going forward.
  • While the government’s fiscal deficit numbers improved, revenue shortfall amidst weaker private consumption, the investment could challenge fiscal parameter.
  • Foreign portfolio investors (FPIs) invested to the tune of $7.8 billion in the Indian securities market during April-October 2019.
  • Emerging trends in consumer credit continue to show a challenging environment for NBFCs.
  • Failure of any NBFC or HFC will act as a solvency shock to its lenders.
  • Loan-related frauds continued to dominate in aggregate constituting 90% per of all frauds reported in FY2018-19 by value.

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