Bank asset quality may see sharp deterioration post-moratorium: RBI

Says banks will have to adapt and adjust to the rapidly evolving economic landscape and entry of niche players and emerging financial technologies

The banking and non-banking financial sectors in India showed resilience in 2019-20, but with nearly 40 per cent of the outstanding loans under a moratorium, the system may face a sharp deterioration in asset quality, the Reserve Bank of India’s (RBI’s) annual publication titled “Trend and Progress of Banking in India”, released on Tuesday, said.

The report evaluated the banking sector’s performance in 2019-20 and touched upon some views for the coming days.

In the year under review, asset quality, capital positions, and profitability strengthened. The gross non-performing assets (GNPA) ratio moderated from its peak in March 2018 to reach 7.5 per