Economic Survey 2020-21: Banking Sector
Part of: GS Prelims and GS- III – Economy
- According to Economic Survey 2020-21, the Gross Non-Performing Assets ratio of Scheduled Commercial Banks decreased from 8.21% at the end of March 2020 to 7.49% at the end of September 2020.
- This has to be seen in conjunction with the asset classification relief provided to borrowers on account of the pandemic, says the Economic Survey.
- Further, the Capital to risk-weighted asset ratio of Scheduled Commercial Banks increased from 14.7% to 15.8% between March 2020 and September 2020 with improvement in both Public and Private sector banks.
- The recovery rate for the Scheduled Commercial Banks through Insolvency & Bankruptcy code-IBC (since its inception) has been over 45%
- Due to the pandemic, the initiation of the Corporate Insolvency Resolution Process (CIRP) was suspended for any default.
- The suspension along with continued clearance has allowed a small decline in accumulated cases.
- The financial flows to the real economy remained constrained on account of subdued credit growth by both banks and Non-Banking Financial Corporations.
- The credit growth of banks slowed down to 6.7% as of January 1, 2021.