MURUGAVEL

Non-banking financial companies (NBFCs) improved their performance on most metrics in the last fiscal year, as the banking industry struggled under the weight of a growing pile of bad loans. According to the financial stability report (FSR) released by the Reserve Bank of India (RBI) on Tuesday, NBFC loans expanded 16.6% in the year, twice as fast as the 8.8% credit growth across the banking sector on an aggregate level. The aggregate balance sheet of the NBFC sector expanded 15.5% in fiscal 2016 compared with 15.7% the previous year, the report said. NBFCs also performed better in terms of asset quality, even though the bad loan norms for these firms are not as stringent as those for full-fledged commercial banks. The gross non-performing assets (GNPA) ratio for the NBFC sector declined to 4.6% of total advances in March 2016 from 5.1% in September 2015, according to the FSR. “While the regulatory norms for the NBFC sector are sought to be brought closer to those a...

Six months after it flagged concerns over weak corporate balance sheets and conducted its first asset quality review (AQR) of banks, the Reserve Bank of India (RBI) has warned that risks to the banking industry’s stability have increased sharply, indicating more pain ahead. The latest edition of the regulator’s financial stability report (FSR), released on Tuesday, said gross non-performing assets (GNPAs) of banks jumped to 7.6% in March from 5.1% in September. The top 100 borrowers accounted for nearly a fifth of these NPAs. Total stressed assets increased slightly to about 11.5% of banks’ combined loan book. “The banking stability indicator shows that risks to the banking sector have sharply increased since the publication of the previous FSR,” said RBI. The FSR is a twice-a-year report prepared by a department of RBI and endorsed by a sub-committee of the Financial Stability and Development Council. The report details the results of stress tests on bank bal...