As per the Report on Trend and Progress of Banking in India 2021-22, a statutory publication released by the Reserve Bank of India, the consolidated balance sheet of scheduled commercial banks (SCBs) registered double digit growth in 2021-22, after a gap of seven years, led by credit growth, which accelerated to a ten-year high in H1:2022-23.
Further, the capital to risk weighted assets ratio (CRAR) of SCBs strengthened from 16.3 per cent in end-March 2021 to 16.8 percent in end-March 2022, with all banks meeting the regulatory minimum capital requirement of 11.5 percent as also the common equity tier-1 (CET-1) ratio requirement of 8 per cent.
The gross non-performing assets (GNPA) ratio of SCBs has been declining sequentially from its peak in 2017-18 to reach 5.8 per cent at end-March 2022, led by lower slippages as well as reduction in outstanding GNPAs. An acceleration in income and contraction in expenditure boosted the profitability of SCBs in 2021-22, measured in terms of return on equity and return on assets.
The financial performance of urban co-operative banks (UCBs) showed improvement in 2021-22, characterised by augmented capital buffers, a decline in GNPA ratio and improved profitability indicators. The NBFC sector maintained comfortable liquidity buffers, adequate provisioning, and a strong capital position during 2021-22, while asset quality improved.
Going forward, however, the report states that NBFCs need to be wary of rising borrowing costs as financial conditions tighten.
In its report, the RBI also stated its vision to develop and operationalise an integrated and standardised technological platform to facilitate frictionless flow of credit to all segments of the society, with a special emphasis on rural and agricultural credit.