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Today, on Jul 25, 2020 the Reserve Bank of India has released the 21st Issue of the Financial Stability Report for 2020.
This report is released twice in a year (bi-annual) by the Reserve Bank of India.
The Financial Stability Report is often referred to as FSR Report, which reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council on risks to financial stability and resilience of the financial system.
The report also takes note of the issues relating to the development and regulation of the financial sector.
Credit Growth Sector
Bank Credit: Amount of the total credit owned by a bank that can be offered to a person or business as a loan.
CRAR: Capital to risk-weighted assets ratio which is also known as Capital Adequacy Ratio (CAR), is an indicator of Bank’s absorbability against its capital risks.
Decline in Gross Non-Performing Asset (GNPA) Ratio
Non-Performing assets: Non-performing assets are the Bad loans of the Banks which have not been serviced or failed to re-generate the income for one term or 90 days. Generally, NPA occurs if the borrower fails to pay the interest or the principal amount of the loan for more than 90 days. Loan amount is also considered as the assets of the bank and if the borrower stops paying its EMIs the bank starts losing its money.
Classification of the NPA: Non-performing assets are classified into three different types –
GNPS: Gross Non-Performing Assets are the sum of the loans which have been identified as the NPA by the Financial Institutions.
PCR: Provision Coverage Ratio indicates the extent of funds a bank has kept aside to cover loan losses.