Context:
The asset quality of scheduled commercial banks (SCBs) improved further with the gross non-performing asset (GNPA) ratio declining to a 12-year low of 2.6% in September, the Reserve Bank of India (RBI) said in the December Financial Stability Report (FSR) released on Monday.
Key Highlights:
- The Net NPA ratio remained nearly at 0.6% for SCBs.
- Major buffers of capital, substantial earnings, and relentless strides in asset quality improvement boosted the resilience of the domestic banking system.
- The GNPA ratio for unsecured lending was marginally higher at 1.7%.
- Unsecured lending are personal loans that does not require collateral, but is instead based on the borrower’s creditworthiness.
- The report further observed that banking system liquidity coverage ratio in September fell to 108.5% from 137.7% a year ago.
Gross Non-Performing Assets (GNPA)
Gross Non-Performing Assets (GNPA) is the total value of loans that have been in default for more than 90 days, indicating inefficiencies in loan recovery, impacting profitability and credit growth in a bank’s financial health.
- NNPA Stands for Net Non-Performing Assets. It’s the final amount of NPAs remaining after the bank has deducted provisions for doubtful and unpaid debts from the GNPA. NNPA is the actual loss suffered by the bank.
