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Today, the Reserve Bank released the 21st Issue of theFinancial Stability Report (FSR), which reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability, and the resilience of the financial system in the context o
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FAQ :
The Financial Stability Report (FSR) is a report released by the Reserve Bank of India that reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability and the resilience of the financial system.
The report indicates that a combination of unprecedented fiscal, monetary, and regulatory interventions in response to COVID-19 has ensured the normal functioning of financial markets.
Major downside risks include the overleveraged non-financial sector, simmering global geopolitical tensions, and economic losses on account of the pandemic.
Bank credit weakened further, and while the capital to risk-weighted assets ratio (CRAR) of Scheduled Commercial Banks (SCBs) slightly decreased, their gross non-performing asset (GNPA) ratio declined and the provision coverage ratio (PCR) improved.
Macro stress tests project that the GNPA ratio of all SCBs may increase from 8.5 per cent in March 2020 to 12.5 per cent by March 2021 under a baseline scenario, potentially reaching 14.7 per cent under a very severely stressed scenario.
Going forward, the major challenges include making large sections of society, especially those excluded from formal financial intermediation, pandemic-proof.
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