NPAs Fall Sharply To 9.3% In FY19: RBI Financial Stability Report

The non-performing assets, after over four years of the rising pile, have witnessed a decline of 9.3 per cent in the financial year 2019, from 11.2 per cent a year ago, the Reserve Bank of India unveiled in its bi-annual Financial Stability Report, on June 28, 2019. "With the bulk of the legacy NPAs already recognised in the banks' books, the NPA cycle seems to have turned around," the FSR said. The RBI expects NPAs to improve to nine percent by March 2020. 

Despite the recent setbacks, the nation's financial system ‘remains stable’, the central bank added. "The financial system remains stable despite some dislocation of late," the report read. The central bank, however, recommended extra vigil on non-banking finance companies (NBFCs) , and warned that a large shadow bank getting hit, can have the same impact on the system as a large bank going down. 

"As the banks, especially the state-run ones, are on the mend, the structure of non-banking credit intermediation should focus on developing on more prudent lines," RBI governor Shaktikanta Das said. He also pitched for better coordination between the government and the monetary authority to take care of the troubles on the growth front, and advised state-run banks to get leaner in such a way that they are able to attract private capital and not overly depend on public funds. 

In December, the RBI's report had said that property prices in India had softened in past five quarters, despite a rise in housing credit growth and favourable bank rates. According to the report, the rise in housing inventory and lukewarm demand had led to the cooling of property prices.

The report had suggested that the all-India housing price index dropped to 5.3 per cent in the second quarter of the financial year 2019, from 16 per cent in Q1 FY15. On the other hand, housing credit declined to 15.8 per cent from 17 per cent during the same period.