Financial Stability Report for July 2021 released by RBI

Financial Stability Report for July 2021 released by RBI

Part of: GS Prelims and GS -III – Economy

In news

• RBI has recently released the Financial Stability Report, July 2021. 
• It is a bi-annual report that reflects risks to financial stability and the resilience of financial system. 

Key highlights of the report 

• The gross non-performing assets (GNPAs) ratio of banks may rise from 7.48% in March 2021 to 9.8% by March 2022. 
• MSMEs face huge stress in meeting their payment obligations. 
  • At the end of March 2021, 15.9% of loans of less than Rs. 25 crore to the MSEME Sector had turned bad. 
• Capital to risk weighted assets ratio (CRAR) of Scheduled commercial Banks (SCBs) increased to 16.0 3% in March 2021. 
  • It is the ratio of a Bank’s capital in relation to its risk weighted Assets and current liabilities.
• Provision coverage ratio stood at 68.86% in March 2021. 
  • A high PCR ratio means most asset quality issues have been taken care of and the bank is not vulnerable. 
• Demand for consumer credit across banks and non banking financial companies (NBFCs) has decreased amidst the second wave of Covid-19. 
• Banks remain relatively unaffected by distractions caused due to the pandemic and are well protected by regulatory, monetary and fiscal Policies.