Stress In Banking Sector Could Be Bottoming Out, RBI Says In Its Financial Stability Report

Although stress in the country’s banking sector continues to remain high, it may be bottoming out fast, the Reserve Bank of India(RBI) has said in its latest Financial Stability Report released on Thursday (21 December).

"The stress in the banking sector, particularly the Public Sector Banks (PSBs), while significant, appear to be bottoming out," the regulator noted.

The RBI, however, noted in the report that bad loans might rise a little further with gross non-performing assets expected to hit 11.1 percent of all loans by September 2018. It also revealed that the private sector banks registered higher increase in their total non-performing assets as compared to their state-run banks.

"The recent capitalisation plan announced by the government for PSBs is expected to significantly augment capital buffers of affected banks as also the credit growth," the RBI report added.

The government has announced a Rs 2.11 lakh crore capital infusion in PSBs, including Rs 1.35 lakh crore worth recapitalisation bonds.