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