Economic Survey 2020-21: Banking Sector

Economic Survey 2020-21: Banking Sector

Part of: GS Prelims and GS- III – Economy

In news 

• 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.

Key takeaways

• 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.