Highlights Of RBI's Report On Trend And Progress Of Banking In India: CareEdge

CareEdge Research Report

Here are some highlights of the Reserve Bank of India’s report on trend and progress in banking.

1. The financial performance of scheduled commercial banks in 2020-21 was marked by a discernible increase in profitability as their income remained stable but expenditure declined.

2. The total income of banks remained stable, despite a marginal decline in its largest component viz. interest income, in an environment characterised by low credit offtake and interest rates

3. The fall was cushioned by a sizeable increase in income from investments. Income from trading also accelerated, as banks booked profits on falling G-Sec yields.

4. Banks were required to maintain additional provisions of at least 10% on moratorium amounts, which was allowed to be spread out across two quarters viz. Q4:2019-20 and Q1:2020-21. Most banks, especially private banks, frontloaded the required provisions in the March 2020 quarter resulting in a higher provision coverage ratio for the year. Combined with lower slippage, this muted the provision requirements during 2020-21 which helped in boosting banks’ profitability.

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