Despite NBFC crisis, NPAs fall to 9.3% in FY19: RBI

The report said resilience of the banks has increased with a sharp improvement in the provision coverage ratio to 60.6 per cent in March 2019 from 52.4 per cent in September 2018 and 48.3 per cent in March 2018.

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The country's financial system "remains stable" despite recent setbacks and the NPA cycle has "turned around" with a sharp reduction in the ratio of dud assets to 9.3 per cent, the Reserve Bank said on Thursday in the Financial Stability Report.

The non-performing assets has "turned around" with a sharp fall in the system-wide NPAs to 9.3 per cent in March 2019 from 11.2 per cent a year ago, the bi-yearly report said.

The NPAs ratio is expected to narrow down further to 9 per cent in March 2020 as per the baseline scenario, it said.

The share of the state-run banks in the overall NPAs was at an elevated 12.6 per cent, but is likely to come down to 12 per cent by March 2020.

"The country's financial system remains stable despite some dislocation of late," the report said, probably alluding to the troubles being faced by the non-banking lenders.

However, the financial market risks continue to be perceived as a "high-risk category" affecting the system, while global risks, and risk perception on macroeconomic conditions as also institutional risks are perceived medium, it said.

The report said the market has got a "discipline" among NBFCs, wherein better performing ones continue to raise funds while those with asset-liability mismatch and asset quality concerns are subjected to higher borrowing costs.

The report said resilience of the banks has increased with a sharp improvement in the provision coverage ratio of all banks to 60.6 per cent in March 2019 from 52.4 per cent in September 2018 and 48.3 per cent in March 2018.