Releasing RBI’s Financial Stability report, Governor Raghuram Rajan Tuesday expressed confidence that the country’s financial system is stable despite the banking sector facing significant challenges.
Rajah said that the banks’ asset quality stress needs to be resolved first before trying to revive credit growth.
The gross non-performing assets of public-sector banks rose to 7.6% in March 2016 and net NPAs by 4.6%, the report said.
Rajan in the past had repeatedly expressed concern over the health of public-sector banks, and pushed for steps to ensure that banks classify certain stressed assets as non-performing assets (NPAs) and make adequate provisions to “strengthen their balance sheets”.
Gross NPAs of public-sector banks rose to 6.03 per cent as of June 2015, from 5.20 per cent in March 2015. RBI has asked banks to review certain loan accounts and their classification over the two quarters ending December 31, 2015, and March 31, 2016.