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Economic shock of pandemic weathered well by banks: Economic survey

“The economic shock of the pandemic has been weathered well by the commercial banking system so far, even if some lagged impact is still in pipeline,” observes Economic Survey 2021-22, tabled by Finance Minister Nirmala Sitaraman in the Parliament on Monday. The survey also notes that the bank credit growth stands at 9.2% as of December 31, 2021. 

Personal loans improved

The survey highlights that the growth in personal loans improved to 11.6% as compared to 9.2% in the previous year. Housing loans, the largest constituent of personal loans, registered a growth of 8% in November 2021. The growth of vehicle loans, the second-largest constituent, improved to 7.7% in November 2021 from 6.9% in November 2020. 

Credit growth 

The survey states that agriculture credit continued to register robust growth, and was at 10.4% in 2021 as compared to 7% in 2020. Credit growth to micro and small industries accelerated to 12.7% in 2021 from 0.6% a year ago, reflecting the effectiveness of various measures taken by the government and the RBI to boost credit flow to the MSME sector. 

Monetary transmission

According to the survey, large surplus systemic liquidity, forward guidance of continuing with the accommodative stance and the external benchmark system for pricing of loans in select sectors aided monetary transmission. 

Deposit insurance 

The percentage of insured deposits vis-à-vis total deposits is 84% for RRBs, 70% for cooperative banks, 59% for SBI, 55% for PSBs, 40% for private sector banks, and 9% for foreign banks. Up to March 31, 2021, a cumulative amount of Rs 57.63 billion has been paid towards claims since the inception of deposit insurance (Rs 2.96 billion in respect of 27 commercial banks and Rs 54.67 billion in respect of 365 co-operative banks). 

Digital payments

According to the survey, in December 2021, 4.6 billion transactions worth Rs 8.26 trillion were carried out by UPI. RBI and the Monetary Authority of Singapore announced a project to link UPI and PayNow, which is targeted for operationalization by July 2022. Bhutan recently became the first country to adopt UPI standards for its QR code. It is also the second country after Singapore to have BHIM-UPI acceptance at merchant locations. 


The total credit of the NBFC sector increased marginally from Rs 27.53 trillion in March 2021 to Rs 28.03 trillion in September 2021. The credit intensity of NBFCs, measured by NBFC credit as a ratio of GDP, has been rising consistently and stood at 13.7% at the end of March 2021. Industry remained the largest recipient of credit extended by the NBFC sector, followed by retail loans and services. 

Gross NPAs Of SCBs down 

The gross NPAs of the scheduled commercial banks (SCBs) reduced to 6.9% in the year 2021, the net NPAs stands at 2.2%. Restructured standard advances (RSA) ratio of SCBs increased from 0.4% to 1.5%. Overall, the stressed advances ratio of SCBs increased to 8.5% at the end of September 2021. The survey claims that Covid-19 related dispensations/moratoriums provided with respect to asset quality contributed towards an increase in restructured assets and as a result, stressed advances ratio. 

The survey highlights that the GNPA decreased to 8.6% at end-September 2021. The stressed advances ratio of PSBs increased to 10.1% during the same period on account of the rise in restructured advances. Based on the capital position as of September 30, 2021, all public sector and private sector banks maintained the capital conservation buffer (CCB) well over 2.5%.

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