The Reserve Bank of India, in its “Report on Trend and Progress of Banking in India 2023-24,” has showcased the steady improvement of India’s financial sector, with non-banking financial companies (NBFCs) taking the lead in asset quality enhancements. The GNPA ratio of NBFCs dropped to 3.4% as of September 2024, reflecting a consistent focus on risk management and operational efficiency. The sector also exhibited robust double-digit credit growth, although unsecured lending contracted, emphasizing a shift towards more secure credit practices. Strong capital buffers ensured that the capital to risk-weighted assets ratio (CRAR) remained well above regulatory norms.
This positive performance by NBFCs aligns with broader trends observed in the financial sector. Scheduled commercial banks (SCBs) experienced significant expansion, driven by robust credit growth. The SCBs’ consolidated balance sheet saw notable gains, supported by an improvement in asset quality. The GNPA ratio of SCBs reached its lowest level in 13 years, standing at 2.7% in March 2024 and further dropping to 2.5% by September 2024. Profitability indicators for SCBs continued their upward trajectory, with the return on assets (RoA) reaching 1.4% and return on equity (RoE) hitting 14.6%.
Urban cooperative banks (UCBs) also contributed to the financial sector’s progress. Their combined balance sheet expanded in 2023-24, with asset quality improving for the third consecutive year. Strengthened capital buffers and improved profitability further reinforced their position in the banking ecosystem.
