Bank GNPAs dip to a low of 2.3% in March: RBI report
In the half-yearly The Reserve Financial Stability Report, the RBI said the GNPAs for 46 banks may rise to 2.6 per cent by March 2027.It can be noted that dud assets have been one of the most challenging parts for the banking system most of the latter part of the previous decade, but the system has been improving on the key ratios over the last few years.
'Nonetheless, external spillovers and weather-related events could pose downside risks to growth. The outlook for inflation, on the other hand, is benign and there is greater confidence in the durable alignment of inflation with the Reserve Bank's target,' said Sanjay Malhotra, Governor, RBI.
'Financial markets remain volatile, especially core government bond markets, driven by shifting policy and geopolitical environment. Alongside, existing vulnerabilities such as soaring public debt levels and elevated asset valuations have the potential to amplify fresh shocks,' it read.
However, the domestic financial system is exhibiting resilience fortified by healthy balance sheets of banks and non-banks, said the Central Bank.
'Financial stability, like price stability, is a necessary condition, and not a sufficient one to boost India's potential growth. As custodians of financial stability, we must endeavour to develop a well-functioning financial system that not only promotes macroeconomic stability but also provides financial services efficiently,' said Malhotra.
Financial conditions have eased supported by accommodative monetary policy and low volatility in financial markets. The strength of the corporate balance sheets also lends support to overall macroeconomic stability.
'The soundness and resilience of scheduled commercial banks (SCBs) are bolstered by robust capital buffers, multi-decadal low non-performing loans ratio and strong earnings,' the RBI report mentioned.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
India Today
25 minutes ago
- India Today
RBI bars foreclosure charges on floating rate loans to micro, small businesses
The Reserve Bank of India has barred banks and non-banking financial companies (NBFCs) from charging prepayment penalties on floating rate loans to micro and small enterprises (MSEs), effective for all loans sanctioned or renewed on or after January 1, directive, issued under the Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025, follows a supervisory review that found divergent practices among lenders. The review revealed that several institutions were levying prepayment charges inconsistently and, in some cases, including restrictive clauses in loan agreements to discourage borrowers from switching to other lenders offering better the importance of "easy and affordable financing" for MSEs, the central bank noted that such clauses often led to customer grievances and disputes, particularly when borrowers sought to refinance their loans at lower interest to the new rules, no prepayment charges will be allowed on floating rate loans to MSEs or to individuals borrowing for business purposes. This applies regardless of whether the loan is prepaid in part or full, and irrespective of the source of funds used to make the prepayment. The exemption will apply from the first day of the loan, with no lock-in exception has been made for certain categories of lenders, including small finance banks, regional rural banks, state and central co-operative banks, and NBFCs in the middle regulatory layer, which are already barred from levying prepayment penalties on loans up to Rs 50 lakh. This framework will continue unchanged for these the case of cash credit and overdraft facilities, the RBI has clarified that no prepayment charges will apply if the borrower informs the lender of their intention not to renew the facility within the agreed period and ensures that it is closed by the due strengthen transparency, the central bank has directed lenders to clearly disclose all applicable prepayment terms in the sanction letter, loan agreement and the Key Facts Statement (KFS), wherever applicable. Retrospective charges will not be allowed, and lenders cannot reintroduce any fees that were previously borrowers were already exempt from prepayment penalties under earlier rules. With this move, the RBI is extending similar protections to small businesses, which often face tighter credit conditions and limited ability to negotiate loan decision follows public consultations on a draft circular issued in February and is part of the RBI's broader effort to standardise customer-facing terms and reduce friction in the credit market.- Ends advertisement
India.com
2 hours ago
- India.com
Madras HC Dismisses Xiaomis Petition Against ED Proceedings In FEMA Violation Case
Chennai: The Madras High Court has dismissed the petitions filed by Xiaomi Technology India Pvt Ltd and its Chief Financial Officer Sameer B.S. Rao, seeking to quash the proceedings initiated by the Enforcement Directorate (ED) in connection with alleged violations under the Foreign Exchange Management Act (FEMA) involving royalty payments of Rs 5,551 crore. Justice N. Anand Venkatesh, delivering the verdict recently, held that the court would not interfere at the "formation of opinion" stage of proceedings under FEMA adjudication rules, as it was only a preliminary step and not a final determination of liability. Xiaomi India is engaged in the procurement, distribution, and sale of Xiaomi-branded products across India. In this context, the company entered into royalty agreements with Qualcomm Incorporated, Qualcomm Technologies Inc. (both US-based entities), and Beijing Xiaomi Mobile Software Co. Ltd, a group company based in China. According to the ED, Xiaomi remitted Rs 5,551 crore between 2016 and 2022 to these foreign entities as royalty payments, allegedly without obtaining prior approval from the Reserve Bank of India (RBI) -- a requirement under FEMA for certain types of foreign remittances, especially where third-party transactions are involved. Following its investigation, the ED filed a complaint, and a show-cause notice was issued by the Adjudicating Authority under FEMA, which Xiaomi challenged before the High Court in April 2024. Appearing for Xiaomi, senior advocate K.G. Raghavan contended that the royalty payments were legitimate current account transactions and therefore did not require the RBI's prior approval. He argued that the ED's initiation of adjudication proceedings was unwarranted. However, Additional Solicitor General L. Sundaresan, representing the ED, submitted that the writ petition was premature, as the adjudication process was still at the stage of forming an opinion. He argued that this stage only requires prima facie material suggesting a contravention of FEMA provisions, and need not be based on conclusive findings. Sundaresan also cited a communication from Qualcomm, wherein Xiaomi was referred to as a 'third party' remitting payments on behalf of foreign group entities -- an act which, according to the ED, constitutes a violation under the FEMA. Accepting the ED's submissions, the High Court held that interference at this stage was unwarranted and permitted the adjudication proceedings to continue. Consequently, Xiaomi's plea challenging the show-cause notice and the formation of opinion was dismissed. "In the considered view of this Court, the case has now reached the stage under Rule 4(4) of the FEMA Rules, which is the stage of defence and therefore, the petitioners will be entitled to all the documents sought by them, including the non-RUDs," the court said in its judgement delivered on June 26.
&w=3840&q=100)
Business Standard
2 hours ago
- Business Standard
Banking system liquidity hits three-year high as market awaits RBI action
Banking system liquidity rose to a net surplus of Rs 3.74 trillion, the highest since June 2022. The market is now awaiting action from the RBI to manage the surplus and ensure monetary transmission Mumbai Banking system liquidity rose further to a net surplus of ₹3.74 trillion, highest since June 1, 2022, latest data by the Reserve Bank of India (RBI) showed. The recent improvement in banking system liquidity can largely be attributed to higher government spending and lower-than-expected goods and services tax (GST) collections, which have eased the usual liquidity pressures. As a result, the liquidity drain was not as sharp as anticipated, dealers said, adding that with RBI already having reduced the Cash Reserve Ratio (CRR), its room for deploying other measures for liquidity withdrawal apart from variable rate reverse repo (VRRR) auction
