{"id":28607,"date":"2018-10-24T13:59:26","date_gmt":"2018-10-24T08:29:26","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=28607"},"modified":"2018-10-24T13:59:26","modified_gmt":"2018-10-24T08:29:26","slug":"reality-check-2","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/reality-check-2\/","title":{"rendered":"Reality check"},"content":{"rendered":"<p><a href=\"https:\/\/www.thehindu.com\/opinion\/editorial\/reality-check\/article24273365.ece\">Reality check<\/a><\/p>\n<p><strong><u>News:<\/u><\/strong><\/p>\n<ol>\n<li>The financial stability report released by the RBI recently.<\/li>\n<\/ol>\n<p><strong><u>Important facts:<\/u><\/strong><\/p>\n<p>2. The report has warned that gross non-performing assets(GNPAs) of scheduled commercial banks could rise from 11.6% in March 2018 to 12.2% in March 2019.<\/p>\n<p>3. This would be highest level of bad debt in almost two decades.<\/p>\n<p>4. The GNPA of banks under the prompt corrective action framework, in particular, is expected to rise to 22.3% in March 2019, from 21% this March.<\/p>\n<p>5. The RBI has warned about rising external risks that pose a significant threat to the economy and to the banks.<\/p>\n<p><strong><u>6. Major highlights of the report:<\/u><\/strong><\/p>\n<ul>\n<li>Major highlight of the report is the central bank\u2019s finding that public sector banks (PSBs) are far more prone to fraud than their private sector counterparts.<\/li>\n<li>This is significant in light of the huge scam unearthed at a Punjab National Bank branch earlier this year.<\/li>\n<li>According to RBI , more than 85% of frauds could be linked to PSBs, even though their share of overall credit is only about 65%.<\/li>\n<\/ul>\n<p><strong><u>7. Challenges\/hurdles:<\/u><\/strong><\/p>\n<ul>\n<li>The tightening of monetary policy by the United States Federal Reserve and increasing borrowings by the U.S. government caused credit to flow out of emerging markets such as India.<\/li>\n<li>The increase in commodity prices is another risk on the horizon that could pose a significant threat to the rupee and the country\u2019s fiscal and current account deficits.<\/li>\n<\/ul>\n<p><strong><u>8. Implications of this :<\/u><\/strong><\/p>\n<ul>\n<li>According to RBI, this will increase the size of the provisioning for losses and affect the capital position of banks.<\/li>\n<li>The capital to risk-weighted assets ratio of the banking system as a whole is expected to drop from 13.5% in March 2018 to 12.8% in March 2019.<\/li>\n<li>Jeopardize the expectation of a bottoming out of the NPA crisis that has affected the banking system and impeded credit growth in the economy.<\/li>\n<li>Increase in inflation .<\/li>\n<li>Increase the risk of an economic slowdown and exert pressure on the entire banking system.<\/li>\n<\/ul>\n<p><strong><u>9. The RBI noted the following reforms in its report:<\/u><\/strong><\/p>\n<ul>\n<li>The RBI Deputy Governor Viral Acharya has noted that governance reforms at PSBs, can help improve their financial performance and also reduce their operational risks.<\/li>\n<li>The recapitalisation plan for banks and the implementation of the Insolvency and Bankruptcy Code to improve the capital position of banks.<\/li>\n<li>Government need to make drastic changes to aspects of operational autonomy and the ownership of PSBs.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Reality check News: The financial stability report released by the RBI recently. Important facts: 2. The report has warned that gross non-performing assets(GNPAs) of scheduled commercial banks could rise from 11.6% in March 2018 to 12.2% in March 2019. 3. This would be highest level of bad debt in almost two decades. 4. The GNPA&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/reality-check-2\/\">Continue reading <span class=\"screen-reader-text\">Reality check<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-28607","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704688350},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/28607","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=28607"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/28607\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=28607"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=28607"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=28607"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}