RBI Governor Shaktikanta Das has asked banks to use the current situation to increase capital.
The Governor of Reserve Bank of India (RBI) Governor Shaktikanta Das has feared that due to the Corona virus epidemic, the actual value of assets in banks may decrease. Not only this, the risk of lack of capital in banks can increase. He estimates that by September 2021, non-performing assets (NPAs) may increase to 13.5 per cent.
- January 11, 2021, 9:48 PM IST
Shaktikanta Das asked banks to change the business model
RBI Governor Das has asked banks to use the current situation to increase capital. Also asked to change the business model, which will prove beneficial in the future. In order to provide relief to the people in the midst of the Corona crisis, the RBI had implemented a loan moratorium for six months, which expired in August 2020. Later, one-time loan restructuring was announced to provide relief to the borrowers. Many banks, and especially private banks, raised capital in the early days of the Corona epidemic.
read this also- Union Budget 2021: Income tax rebate can be given on expenses incurred in the treatment of corona, know everything about itVolatility in financial assets can cause volatility
Shaktikanta Das said that the fiscal authorities are facing revenue shortage. This has led to the expansion of the market borrowing program. This has put additional pressure on banks. The gap between some sectors of financial markets and the real economy has widened in recent times. He cautioned that the increased value of financial assets poses a risk to financial stability. Banks and financial intermediaries need to take care of this. He said that we have suffered a lot due to the epidemic. We have to work towards economic growth and restore livelihood. Financial stability is the first condition for this.
read this also- PFRDA’s gift to pensioners! Exit can also be done online with NPS, learn how to use new facility
GNPA ratio may be 14.8% if financial environment is disturbed
The Financial Stability Report states that the gross NPAs of banks may increase to 13.5 per cent by September 2021. It was 7.5 percent in September 2020. If the environment deteriorates, the gross NPA ratio may increase to 14.8 percent. The GNPA ratio in public sector banks was 9.7 percent in September 2020. It may increase to 16.2 percent by September 2021. During this period, GNPA ratio in private sector banks may increase from 4.6 per cent to 7.9 per cent and in foreign banks from 2.5 per cent to 5.4 per cent. In situations of severe pressure, it can increase more than expected.