Financial Stability Report (FSR) 2021

Financial Stability Report (FSR) 2021

Recently, the Reserve Bank of India (RBI) has released the Financial Stability Report (FSR), July 2021. The Financial Stability Report (FSR) is a bi-annual report.

It reflects the risk posed to the financial stability and resilience of the financial system.

Main findings of the report

  • The gross non-performing assets (GNPA) ratio of banks may increase from 7.48 per cent in March 2021 to 9.80 per cent by March 2022.
  • Micro, Small and Medium Enterprises (MSMEs) are facing immense stress in meeting their payment obligations.
  • For public sector banks (PSBs), by the end of March 2021, 15.9 per cent of loans to the MSME sector were bad at less than Rs 25 crore.
  • The risk-to-capital ratio (CRAR) of scheduled commercial banks (SCs) increased to 16.03 per cent in March 2021.
  • Basel II criteria determine the CRARS percentage.
  • The Provisioning Coverage Ratio (PER) stood at 68.86 per cent in March 2021.
  • A high PCR ratio (ideally above 70 per cent) means that most asset quality issues have been taken care of and the bank is not vulnerable.
  • Demand for consumer credit at banks and non-banking financial companies (NBFCs) has slackened amid the second wave of the pandemic.
  • Banks have been relatively protected from pandemic-induced disruptions, aided by regulatory, monetary and fiscal policies.

Source – The Hindu

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