Q) As per RBI guidelines, in how many days any loan amount is classified as NPA?
- 30 days
- 60 days
- 90 days
- 120 days
Q) As per the Financial Stability report, which of the following type of banks are likely to have least percentage of NPA?
- Public sector banks
- Private sector banks
- Foreign banks
- Cooperative banks
What is Financial stability report?
- RBI has released 22nd issue of the Financial Stability Report.
- It is a biannual exercise. (not biennial)
- It reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council(FSDC) on risks to financial stability.
What is FSDC?
- First mooted by the Raghuram Rajan Committee in 2008.
- Finally in 2010, the then Finance Minister,Pranab Mukherjee, decided to set up such an autonomous body dealing with-
- Macro prudential and financial regularities
Highlights of the report
- In the initial phase of the pandemic, RBI and govt focused their policy actions on mitigating stress and restoring normal
- Now their focus has shifted to supporting and preserving the recovery of businesses and households.
- Positive news on the vaccine front came with an optimistic outlook; however, the second wave of the outbreak with the discovery of virulent strains continues to hit the optimism.
- Policy measures taken by regulators and the government have ensured the smooth functioning of domestic markets and financial institutions.
- The disconnect between specific segments of financial markets and the real economy has increased since last year.
- Bank credit growth has remained subdued, with the moderation largely seen in bank groups.
- However, banks’ performance parameters have improved owing to coronavirus aid extended by the government.
What about NPA?
- Bad loans of Indian banking system could jump sharply by September, according to Reserve Bank of India’s estimates, considering the current macroeconomic climate.
- Gross bad loans on bank balance sheets could rise to 5% by Sept. 30.
- That compares with 5% in September 2020.
- In the worst case scenario, the gross bad loans could rise to 8%—the highest in two decades—by the end of the second quarter of financial year 2021-2022.
- The system level capital adequacy ratio is projected to drop from 15.6% in September 2020 to 14% in September 2021, under the baseline scenario and To 12.5% under the severe stress scenario, the RBI said.
- The stress test results indicate four banks may fail to meet the minimum capital level by September 2021 under the baseline scenario,
- Without factoring in any capital infusion by stakeholders.
- In the severe stress scenario, nine banks may not meet the regulatory minimum.
Q) Arrange the following in the decreasing order of the liquidity?
- Demand deposits with the banks
- Time deposits with the banks
- Savings deposits with the banks