MUMBAI: The financial system is resilient and stable, despite external risks with all key macro indicators returning into the positive territory. While banks are exhibiting strong profitability and healthier asset quality as non-performing assets have fallen to a 13-year low as of September, non-banks have healthy capital buffers and good earnings, and insurance companies maintain a robust solvency ratio, says the financial stability report.
The report, released by the Reserve Bank on Monday, reflects on the assessment of the sub-committee of the Financial Stability and Development Council (FSDC) and highlights the robustness of our financial system amid global vulnerabilities.
“The economy is exhibiting resilience and stability, and the gross domestic product is projected to grow at 6.6 per cent this fiscal, aided by a revival in rural consumption, a pickup in government expenditures and investment, and strong services exports,” the report said.
“The soundness of banks has been bolstered by strong profitability, declining non-performing assets and adequate capital and liquidity buffers. Return on assets (RoA) and return on equity (RoE) are at decadal highs, while the gross non-performing asset (GNPA) ratio has fallen to a multi-year low,” the report said.
It also said macro-stress tests demonstrate that most banks have adequate capital buffers relative to the regulatory minimum threshold even under adverse stress scenarios. Stress tests also validate the resilience of mutual funds and clearing corporations.