Economy robust despite global risks

• The Indian economy and the financial system remain robust and resilient, anchored by macroeconomic and financial stability, the Reserve Bank of India (RBI) said in the 29th issue of the Financial Stability Report (FSR)

Key highlights

• With improved balance sheets, banks and financial institutions were supporting economic activity through sustained credit expansion, the RBI said.
• According to the FSR, the capital to risk-weighted assets ratio (CRAR) and the common equity tier 1 (CET1) ratio of scheduled commercial banks (SCBs) stood at 16.8% and 13.9%, respectively, as at end-March 2024.
• SCBs’ gross non-performing assets (GNPA) ratio fell to a multi-year low of 2.8% and the net non-performing assets (NNPA) ratio declined to 0.6% at end-March 2024.
• The RBI noted in the FSR that the global economy was facing heightened risks from prolonged geopolitical tensions, elevated public debt, and the slow progress being made in the last mile of disinflation.
• Despite these challenges, the global financial system had remained resilient, and financial conditions stable, the Reserve Bank added.

Prelims takeaway

• RBI
• CRAR