The Reserve Bank of India vide its publication dated 29th December 2020 placed in its website the Report on trend and progress of banking in India 2019-2020 in pursuance of provisions of the Banking Regulations Act, 1949 as per details given below:
Its 230 pages report is a treasure house of rare information on banks and the non-banking sector on account of the impact of COVID 19 and the way forward.
It is appropriate to reproduce some of its conclusions as under but a detailed study of the report is analyzed in my words thereafter:
Let us dive deep into the report to understand its nuances. Now, over to the main report for our enlightened intellect.
6 chapters adorn its main report as per details given below:
The following information may throw light on the detailed study of RBI over the innocuous-looking title:
1. List of tables – 85
2. List of charts – 109
3. List of appendix tables – 38
The above information is interspersed over the six chapters with varied and complex structure.
Let me introduce the names of some of the tables.
Loan moratorium, the balance sheet of SCBs, the profile of select liabilities and assets, cost of funds and return on funds by bank groups, return on assets and return on equity of SCBs, bank GroupWise, component-wise capital adequacy of SCBs, asset classification as per IRAC norms, classification of loan assets by bank GroupWise, frauds in various banks happened on the date of reporting/occurrence, bank Group Wise insured deposits, the financial performance of local area banks, the consolidated balance sheet of small finance banks, the financial performance of regional rural banks/Urban cooperative banks/abridged balance sheet of NBFCs/HFCs/AIFIs.
Similar information on the list of charts which appealed to me are given below:
Gross non-performing loans ratio, return on assets, capital to risk-weighted assets ratio, leverage ratio, market-based indicators of bank health, distribution of top 100 banks by Tier-1 capital, asset quality and profitability of top 100 banks, soundness of top 100 banks, select aggregates of SCBs/deposit growth of SCBs/growth in term deposits and CASA deposits, growth in borrowings, trends in credit rations, trends in banks investments, international liabilities and assets of banks, the impact of provisioning on profitability, capitalization of Indian banks, leverage and liquidity, the asset quality of banks. stress on large borrower accounts, the share of fraud cases banks group wise.
(Any serious-minded academicians/research divisions of SCBs or various departments of the central government and the state governments will be glad to look, study and interpret the results to suit their goals)
Let us look forward to the views of RBI on performances of SCBs and others in details:
What about my observations on the vast multitude of information provided by RBI?
1. Loan moratorium information from page 24 of the main report.
|%age of total customers||%age of total o/s||%age of total custs||%age of total o/s|
The above information is self-explanatory. You can have your own inference.
2. Anyone will like to know about deposits, capital, or loans and advances information about all SCBs?
|Pub. Sec. banks||2019||2020(amount in Crores of rupees)|
|Loans and advances||5892667||6158112|
|Private sector banks|
|Loans and advances||3327328||3625154|
|Loans and advances||9676183||10301914|
The above information speaks by itself and you may interpret it accordingly. All figures show an increasing trend, in my view.
With the increasing frauds or frequent mention of frauds in newspapers recently, I am interested to look at the available information.
(amount in Rs crores)
Frauds (Since frauds under advances generate a lot of interest, the following information is given).
|2004-05||2016-17(amount in Rs crores)|
Figures have been provided only up to 2016-17 but the total amounts of frauds have gone up by 8.86 times during the period of nearly 12 years. The position further deteriorated during the recent years enforcing technological updates of system monitoring both at individual banks level as well as at RBI level.
Let us view the information on page 178 from Appendix Table V.4:
Indicators of Financial Health: District Central Co-operative Banks (At end-March)
Let us concentrate on information pertaining to the various regions and also the best and the least performance of them.
|(Amounts for years are shown below in Rs Crores)|
|(2017-18) (2018-19)||2018(%) 2019%|
|Region||No||Profit||Loss||Profit||Loss||(NPA to Loans ratio)|
All over the country, NPA to Loans ratio has shown an increasing trend in 2019 as compared to 2018 though two regions have shown a downward turn indicating better recovery.
Let us have an understanding of NBFCs’ performance over the last three years.
|Cost to income %||80.2||91.7||84.7|
Let us hear what RBI projects about the likely future performance of the banks.
“With the moratorium coming to an end, the deadline for restructuring proposals is fast approaching and with the possible lifting of the asset quality standstill, banks’ financials are likely to be impacted in terms of asset quality and future income. Going forward, banks will have to adapt and adjust to the rapidly evolving economic landscape due to these challenges and also the entry of niche players and emerging financial technologies.”
Let us finalize our journey through this massive 230-page report with some of the immediate steps taken by RBI to face the most uncertain COVID 19 under various heads. These actions taken are contained on pages 42-44.
These measures have fallen under the following heads for understanding their importance:
The best way to conclude this massive report of RBI is to reproduce its statement on page 42 which is given as under:
“In the face of COVID-19 related disruptions, the Reserve Bank acted swiftly with several conventional and unconventional policy measures aimed at enabling normal functioning of financial markets and institutions, facilitating and incentivizing bank credit flows, supporting monetary transmission and easing of financial stress in specific sectors and markets and increasing the systemic liquidity.”
Let us learn the above measures of RBI in light of the historic and most troublesome pandemic COVID 19 whose effects on the world economy is still under debate and consequences are unknown but the judgment of the world towards Indian efforts to tackle its evil effects and the most dynamic and timely actions taken and are still being taken, supervised and making the effects least painful for the Indian economy by Indian government and RBI are being lauded immensely. I am proud to be at this time to be benefitted by these admirable efforts.
I have clearly informed at the beginning that the above article culled out of the RBI report on banking is a view as envisioned by me. None of us, myself, RBI, or taxguru.in intend giving any legal advice or technical guidance. One should refer to experts to learn or interpret the RBI report.