Statsguru: In a year dominated by Covid-19, financial stability is intact

The central bank now expects about 9.8 per cent of gross advances to be non-performing by March 2022, in the baseline scenario

The Reserve Bank of India’s (RBI’s) latest Financial Stability Report shows that gross non-performing assets (GNPAs) of scheduled commercial banks stabilised at 7.5 per cent of gross advances at the end of March 2021, unchanged from the level six months ago. Public sector banks still remain worse off compared to private banks in India in terms of asset quality (chart 1).

But the RBI had estimated it to be at a much higher level. A Business Standard analysis highlights that RBI has been overestimating GNPA levels over the last few years (chart 3).

“The dent on balance sheets and performance