The downturn in the Indian market has cast a pale shadow on the credit increase of the creditors. The Financial Stability Report (FSR), published by the Reserve Bank of India (RBI), states credit expansion moderated to 8.7 percent on a year-on-year (y-o-y) foundation in September 2019 from 13.2 percent in March 2019. At precisely the exact same interval, however, deposit growth rose to 10.2 percent from 9.9 percent, thereby surpassing the credit development. This is really for the first time since Q2 of FY17 the credit expansion has dropped beneath the deposit development.
On the profitability front, public sector banks growth rates were muted due to poor credit expansion in addition to slow settlement of bad assets. In the same way, private banks growth ratios also diminished whereas overseas banks revealed an improvement.
Though the asset quality of banks remained steady in September 2019 compared to March 2019 with gross NPAs in 9.3 percent, but the FSR report of the RBI claims the poor loans may increase in the forthcoming months and hit 9.9 percent by September 2020. Though the GNPA ratio remained unchanged at 9.3 percent between March and September 2019, the supply coverage ratio (PCR) of banks climbed to 61.5 percent in September 2019 from 60.5 percent in March 2019, indicating increased endurance of the banking industry.
The asset quality of services and agriculture industries deteriorated in September 2019 compared to March 2019, although slippages from the industrial sector fell in this period. One of the sub-sectors inside sector, the slippage ratios of fabrics, rubber and building businesses increased throughout the period.
StatsGuru is a weekly feature. Each Monday, Business Standard guides one through the amounts you Want to know to Create sense of their headlines; Source: Financial Stability Report December 2019, RBI