Brace for change: A key development on the anvil is the green taxonomy

The central bank is in the process of finalising and issuing a guidance note on scenario analysis and stress testing of climate-related risks

Banks’ loan-book quality remains robust. According to the Reserve Bank of India's (RBI's) Financial Stability Report (December, 2024), buoyed by falling slippages, higher writeoffs, and steady credit demand, the gross non-performing asset (NPA) ratio of scheduled commercial banks fell to 2.6 per cent in September 2024, the lowest in over a decade. The net NPA ratio also declined to 0.6 per cent, aided by strong provisioning. Additionally, the special mention accounts (SMA-2) ratio, which is a lead indicator of asset quality, is also displaying low potential impairment.

 

The retail portfolio of banks, however, is telling a different story. While the