• Reserve Bank of India recently released the Financial Stability Report 2023.

The Global Financial Stability Report (GFSR) is a semiannual report by the International Monetary Fund (IMF) that assesses the stability of global financial markets and emerging-market financing.

• It is biannual report that reflects risks to financial stability and resilience of Indian financial system.

MAJOR FINDINGS

• Indian banking system is well capitalised and capable of absorbing macroeconomic shocks over a one-year horizon even in the absence of any further capital infusion.
• Gross Non-Performing Assets (GNPA) ratio of Scheduled commercial banks (SCBs) continued its downtrend and fell to a 10-year low of 9% in March 2023.
  • It is further expected to decrease to 3.6% by March 2024.
  • Net non-performing assets (NNPA) ratio declined to 1.0%.
• Capital to Risk-Weighted Assets Ratio (CRAR) of SCBs rose to historical highs of 1% in March 2023.
• Remarkable credit growth in the banking sector, equally driven by the public sector banks and the private ones. Credit growth reached 15.4% , with considerable contribution from the personal loan segment.
• The aggregate deposit growth picked up pace to reach 11.8% as on June 02, 2023.
• The report describes some emerging risks to financial stability emanate from cryptocurrencies (although limited as the overall size is 0.4% of global financial assets) and cyber risks that requires special attention.
• Insolvency and Bankruptcy Code (IBC) has rescued 72% of the distressed assets since it came into being in 2016.
  • Average time for concluding corporate insolvency resolution process (CIRPs) that yielded resolution plans was 512 days (330 days provided in IBC).