RBI Trend and Progress Report, 2020

The Trend and Progress report of Reserve Bank of India provides information about performance of the banking sector. This includes non-banking Financial Institutions and cooperative banks. The report also offers perspectives on the evolving outlook of financial sector of India. The report is a statutory compliance of Banking Regulation Act, 1949.

Key Findings of the Report

• The report said that commercial banks gross non-performing assets ratio declined from 9.1% in March 2019 to 7.5% in September 2020. The COVID-19 provisioning and ploughing back of dividends will help shield their balance sheets.
• The capital to risk weighted assets ratio of the scheduled commercial banks strengthened from 14.3% in March 2019 to 15.8% in September 2020. This helped in recapitalisation of public sector banks.
• The net profits of the scheduled commercial banks turned around in the financial year 2019-20 after losses in previous years. Scheduled commercial banks have consolidated the gains achieved after the turnaround in 2018-19.
• The RBI bank has taken series of policy measures to mitigate the effects of covid-19. The major efforts as noted by the report as follows
  • The regulatory Ambit of RBI was reinforced by legislative amendments. This provided greater powers to the apex bank over cooperative banks.
  • A series of initiatives were also taken to bolster the supervisory Framework.
• The recovery process of the economy was aided by the resolution of large accounts through the Insolvency and bankruptcy code, Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest act, 2002. (SARFAESI).
• The performance of state cooperative banks improved in terms of asset quality and profitability.
• The balance sheet growth of urban cooperative banks moderated in 2019-20. The asset quality of urban cooperative banks deteriorated that resulted in net losses according to the report.

Month: Current Affairs - December, 2020