The latest RBI report on banking trends in India, released on Wednesday, highlights the growth and performance of scheduled commercial banks (SCBs), co-operative banks, and non-banking financial companies (NBFCs) in the financial year 2022-23 and the ongoing period of 2023-24.
In 2022-23, the consolidated balance sheet of SCBs expanded by 12.2%, primarily propelled by increased credit to the retail and services sectors. Deposit growth also showed improvement, albeit trailing behind credit growth. The capital to risk weighted assets ratio (CRAR) of SCBs stood at a healthy 16.8% by end-September 2023, meeting regulatory minimum requirements, including the common equity tier 1 (CET1) ratio requirement.
Furthermore, there has been a sustained improvement in asset quality, with the gross non-performing assets (GNPA) ratio dropping to 3.2% by end-September 2023, continuing the positive trend observed since 2018-19.
The report emphasizes that higher net interest income and reduced provisioning have contributed to the enhancement of net interest margin (NIM) and overall profitability for SCBs in 2022-23.
Regarding urban co-operative banks (UCBs), their combined balance sheet expanded by 2.3% in 2022-23, driven by growth in loans and advances. UCBs demonstrated improved capital buffers and profitability throughout 2022-23 and Q1:2023-24.
For non-banking financial companies (NBFCs), the consolidated balance sheet exhibited a significant 14.8% expansion in 2022-23, primarily fueled by double-digit credit growth. Notably, the sector's profitability and asset quality improved during this period and continued positively into H1:2023-24. The sector maintained robust capitalization levels, surpassing the regulatory CRAR requirement.
Overall, the report underscores the positive trajectory observed in the performance metrics of SCBs, UCBs, and NBFCs, indicating improved asset quality, enhanced profitability, and sound capitalization levels across the banking and financial landscape.
(With Agency Inputs)
ALSO READ | RBI Releases Draft Aimed at Simplifying Licensing Norms for Money Changers
