Economy on recovery path; inflationary pressure, geopolitical risks warrant careful handling of situation: RBI

MUMBAI: The Reserve Financial institution of India (RBI) on Thursday mentioned the Indian financial system is nicely on the trail of restoration although inflationary pressures and geopolitical dangers warrant cautious dealing with and shut monitoring of the state of affairs. The RBI‘s twenty fifth Monetary Stability Report (FSR) additionally mentioned banks in addition to non-banking monetary establishments have enough capital buffers to face up to shocks.
“However the challenges from world spillovers, the Indian financial system stays on the trail of restoration, although inflationary pressures, exterior spillovers and geopolitical dangers warrant cautious dealing with and shut monitoring,” the report mentioned.
The report noticed that the outlook for the worldwide financial system is shrouded by appreciable uncertainty due to the conflict in Europe, front-loaded financial coverage normalisation by central banks in response to persistently excessive inflation and a number of waves of the coronavirus pandemic.
Relating to the banking sector, it mentioned the Capital to Threat weighted Belongings Ratio (CRAR) of Scheduled Industrial Banks (SCBs) rose to a brand new excessive of 16.7 per cent whereas their Gross Non Performing Belongings (GNPA) ratio fell to a six-year low of 5.9 per cent in March 2022.
Macro stress exams for credit score threat reveal that SCBs would be capable to adjust to the minimal capital necessities even beneath extreme stress eventualities, it added.