‘Banks, NBFCs must continue to give highest priority to quality of governance’
Banks, nonbanking finance companies (NBFCs) and other financial entities must continue to give the highest priority to quality of governance and adherence to regulatory guidelines, RBI Governor Shaktikanta Das said. He observed that financial sector players, by and large, operate with public money – be it of depositors in banks and select NBFCs or investors in bonds and other financial instruments.
“They should always be mindful of this. The Reserve Bank will continue to constructively engage with financial entities in this regard. It needs to be recognised that financial stability is a joint responsibility of all stakeholders,” Das said. The Governor observed that the latest data as of the end of December 2023 show that the key indicators of capital and asset quality of scheduled commercial banks (SCBs) continued to be healthy. The financial indicators of nonbanking financial companies (NBFCs) are also in line with that of the banking system as per the latest available data.
CRAR RATIO
The capital adequacy ratio (CRAR) and the liquidity coverage ratio (LCR) of SCBs were well above the regulatory threshold. As per provisional data with RBI, the CRAR ratio of scheduled commercial banks (SCBs) stood at 15.9 per cent in December 2023. The provision coverage ratio increased to 75.6 per cent. The LCR of SCBs was comfortable at 131.4 per cent, much above the minimum stipulation of 100 per cent.
GNPA (gross nonperforming assets) ratio dipped to 3 per cent (of gross advances) in December 2023 from 3.3 per cent in September 2023 and 3.8 per cent in March 2023. The net NPA ratio of SCBs further dipped to 0.7 per cent. The net interest margin (NIM) of SCBs at 3.7 per cent showed slight moderation visàvis 3.8 per cent recorded in the last three quarters. Headline profitability indicators — return on asset at 1.3 per cent in December 2023 and return on equity at 13.2 per cent, however, hovered around their decadalhigh levels.