The Reserve Bank of India (RBI) has cautioned private banks against writing off loans to artificially boost their financials. This practice could hide problems in unsecured loans and distort the true asset quality, the RBI said in its Financial Stability Report (FSR).
The report highlights a drop in gross non-performing assets (GNPAs) to a 13-year low of 2.6% in September 2024. However, the RBI remains concerned about the rising trend of unsecured loans and the weakening of loan approval standards.
Other key points include a dip in the banking system’s liquidity coverage ratio and a decrease in the share of large borrowers in GNPAs.
#RBICaution #BankingReport #LoanWriteOff #AssetQuality #PrivateBanks #FinancialStability
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