Economic recovery gradual, uneven amidst global headwinds: RBI report
High-frequency indicators in the first quarter of this financial year show an “”unevenly strengthening recovery” despite global headwinds, said the Reserve Bank of India on Thursday.
“In the Indian economy, high-frequency indicators point to a gradual but unevenly strengthening recovery in the first quarter of 2022-23, in spite of headwinds from the geopolitical situation, elevated commodity prices, especially of crude oil, and volatile financial conditions, as global spillovers endeavour to unsettle domestic financial markets with bouts of turbulence,” said the central bank’s financial stability report.
While corporate sales and profitability have risen, a durable commencement of the capex cycle remains elusive.
Bank credit growth is picking up steadily, already clocking double digits, the report said while highlighting that gross non-performing assets (NPA) was now at six-year low.
“SCBs’ [scheduled commercial bank] gross non-performing assets (GNPA) ratio slipped to a six-year low of 5.9 per cent and net non-performing assets (NNPA) ratio fell to 1.7 per cent in March 2022. The provisioning coverage ratio (PCR) increased to 70.9 per cent in March 2022 from 67.6 per cent in March 2021,” the report said.
Macro-stress tests for credit risk reveal that SCBs are well-capitalised and all banks would be able to comply with the minimum capital requirements even under adverse stress scenarios.
“Banks have also bolstered capital and liquidity positions while asset quality has improved. Non-banking financial companies (NBFCs) remain well capitalised,” it said.