India's financial system remains stable but stress test shows bad loans may increase, according the Reserve Bank of India's bi-annual financial stability report.
The results of the latest systemic risk survey conducted by the Reserve Bank in October 2017 indicated that among risks affecting the financial system, ‘global risks’ and the risk perception on macro-economic conditions and institutional risks were perceived to be in ‘medium’ category
RBI’s Financial Stability Report
The report noted that credit growth of scheduled commercial banks has improved in the first half of the current fiscal. But state-owned lenders continued to lag behind their private counterparts, it said.
Gross non-performing assets ratio in the banking sector may may rise to 10.8 percent in March 2018 from 10.2 percent in September, according to the baseline scenario of stress tests conducted by the central bank.