InvestorQ : What were the key ideas in the RBI Financial Stability Report or FSR presented by the RBI yesterday?
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What were the key ideas in the RBI Financial Stability Report or FSR presented by the RBI yesterday?

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Sam Eswaran answered.
3 months ago
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The Reserve Bank of India presented the RBI Financial Stability Report or FSR for the Sep-20 HY. The release in January is considered pretty late and that had let do speculation about the likely deterioration in banking numbers. However, it must be said that the actual numbers presented by the FSR for Sep-20 HY is actually quite impressive.

What is perhaps most impressive is the fact that the PSU banks showed a substantive improvement on most parameters including profitability, per share ratios, capital adequacy and NPA management. The entire banking industry saw a sharp fall in gross NPAs in the Sep-20 HY combined with a sharp growth in profitability parameters.

In addition, even the capital adequacy was sharply up in the period to Sep-20. The only area of concern is that the FSR has highlighted the risks of the prolonged lockdown which had resulted in liberal moratorium to borrowers. The FSR projects the GNPAs to worsen from 7.5% in Sep-20 to 13.5% in Sep-21. In fact, RBI has warned that in a worst-case scenario these NPAs could go as deep as 14.8% next year. That could be the one area of concern.

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