FINANCIAL STABILITY REPORT, JUNE 2023
Reserve Bank released the 27th issue of the Financial Stability Report (FSR), which
reflects the collective assessment of the Sub-Committee of the Financial Stability and
Development Council (FSDC) on risks to financial stability and the resilience of the
Indian financial system.
Financial Stability Report (FSR) is a half-yearly publication with contributions from all
the financial sector regulators.
Important Highlights of Report:
Schedule Commercial Banks
The banking system profitability improved with return on assets (RoA) increasing to
1.1 per cent in 2023 from a low of -0.2 per cent in 2018.
The capital to risk-weighted assets ratio (CRAR) and the common equity tier 1 (CET1)
ratio of scheduled commercial banks (SCBs) rose to historical highs of 17.1% and
13.9%, respectively, in March 2023.
SCBs’ gross non-performing assets (GNPA) ratio continued its downtrend and fell to
a 10-year low of 3.9 % in March 2023 and the net non-performing assets (NNPA) ratio
declined to 1.0 %.
The provisioning coverage ratio (PCR) rose to 74.0 %. Led by strong growth in net
interest income and significant reduction in provisions, the profit after tax of SCBs
registered a growth of 38.4 % in 2022-23.
Aggregate deposits growth, which had undergone a slight moderation during 2021-
22 and H1:2022-23, picked up pace to reach 11.8 % as on June 02, 2023.
o Bank deposits grew by 10.0 % (y-o-y) in 2022-23 and improved to 11.8 % in
early June 2023.
o This growth was mainly driven by private sector banks (PVBs).
SCB’s credit growth (y-o-y) has been accelerating since early 2022, led by both public
sector banks (PSBs) and PVBs; by June 02, 2023, it reached 15.4 %.
o Credit for agriculture, services and personal loans grew faster than lending to
the industrial sector.
o In particular, personal loans recorded a broadbased growth of 22.2% (y-o-y)
with all major segments, viz., housing, credit card receivables, vehicle/ auto
loans, education loans, registering robust growth.
SCBs’ profit after tax (PAT) recorded a healthy growth of 38.4 per cent (y-o-y) during
2022-23, led by strong increase in net interest income (NII) and lowering of provisions.
PAT of PSBs grew at a faster rate than that of PVBs whose operating expenses
increased by 29.4 per cent.
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Urban Co-operative Banks
The CRAR of urban co-operative banks (UCBs) rose to 16.5 % in March 2023 while
that of NBFCs stood at 27.5 %.
Credit growth (y-o-y) of primary urban cooperative banks (UCBs) increased from 3.4
per cent in September 2022 to 5.7 per cent in March 2023
NBFC
The GNPA ratio (excluding core investment companies44) fell sharply from 5.4 per
cent in September 2022 to 3.8 per cent in March 2023.
Risk Management in Insurance
The solvency ratio of the insurance sector remains above the minimum threshold
limit of 150 %.
Other Miscellaneous Facts in Report
Systemic Risk Survey
As per the systemic risk survey conducted in May 2023, risk perception across all major
categories of systemic risk except institutional risk has receded.
A large borrower is defined as one who has aggregate fund-based and non-fund-based
exposure of `5 crore and above.
DICGC settled claims amounting to `751.8 crore during 2022-23.
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Corporate Insolvency Resolution Process (CIRP): Since provisions relating to the CIRP
came into force in December 2016, a total of 6,571 CIRPs have commenced by March
2023, of which, 4,515 CIRPs (69 per cent) have been closed. Till March 31, 2023 678
CIRPs have ended in resolution.
IFSCA: The cumulative banking transactions undertaken by IBUs crossed US$ 422.6
billion till March 2023.
Climate Change Initiatives by SEBI: SEBI had mandated ESG related disclosures for the
top 100 listed entities (by market capitalisation) since 2012 (later extended to top
1,000 entities) as per the business responsibility report (BRR) which was replaced with
the business responsibility and sustainability report (BRSR) in 2021. BRSR disclosures
include environment risks, environment related disclosures {viz., greenhouse gas
(GHG) emissions, air pollutant emissions, energy consumption, biodiversity, waste
generated and waste management practices}.
Pension Funds: The number of subscribers under the National Pension System (NPS)
and the Atal Pension Yojana (APY) increased by 21.6 per cent (y-o-y) during 2022- 23,
whereas the assets under management (AUM) recorded 22.0 per cent growth. The
number of subscribers under NPS and APY altogether has reached 6.32 crore and AUM
touched ` 8.98 lakh crore as at end-March 2023.
E-wallet Investments in Mutual Funds. To boost the security in mutual fund industry,
full Know Your Customer (KYC) compliant e-wallet (as per RBI norms) are permitted
for investment in mutual funds within the umbrella limit of Rs. 50,000 (both e-wallet
and/or cash).
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