RBI Financial Stability Report: Banks moved aggressively to retail loans as corporate borrowing slowed

RBI

The share of large borrowers in gross advances of banks declined successively over the past three years, as retail loans grew faster than borrowings by corporates, the Reserve Bank of India (RBI) Financial Stability Report released on June 28 has said.

The share of big borrowers declined from 51.1 percent in March 2020 to 46.4 percent in March 2023, the report says. The financial stability report is a half-yearly publication that offers insights into the developments in the country's financial sector.

The share of large borrowers in the gross non-performing assets (GNPAs), too, came down from 75.7 percent in March 2020 to 53.9 percent in March 2023, the report said.

Subsequently, the asset quality in the large borrower portfolio saw a significant improvement, with the GNPA ratio declining from 12.2 percent to 4.5 percent over the period, the report says.

Though there has been an increase in SMA-19 loans in the March 2023 quarter, the total stock of SMA category loans has fallen by 26.2 per cent (q-o-q) in the same period , the report showed. SMA accounts are special mention accounts that begin to show some stress in repayments.

The report said improvement in the SMA-2 ratio in March 2023 across bank groups reflected the containment of potential slippages during first half of financial year  23.
In the large borrower accounts, the proportion of standard assets to total funded amount outstanding improved from 86.2 per cent in March 2020 to 94.3 per cent in March 2023 with corresponding declines
in NPAs, the RBI report said.

Further, the asset quality of top 100 borrowers improved, with their share in banks' GNPAs declining from 6.8 per cent as of March 2022 to 1.6 per cent as of March 2023, the RBI FSR report added.