On Friday, Shaktikanta Das, the boss of India’s central bank, the Reserve Bank of India (RBI), shared that banks and non-banking financial companies (NBFCs) are doing well. He explained that the gap between the money banks lend (credit) and the money they hold (deposits) is getting smaller. This means that there is more money being saved in banks, which helps support loan growth.
As of November 15, 2024, the loans given by banks grew by 12.4%, while deposits increased by 11.6%. This shows that people are saving more money, which is great for the economy!
The quality of loans in banks is also getting better. The RBI reported that the amount of loans that are not being paid back (called non-performing assets or NPAs) has dropped to a low of 2.54%, the best it has been since March 2011. Additionally, the rate at which new loans are falling behind on payments has gone down from 1.70% to 1.35% over the past year.
The RBI is carefully watching the financial system to make sure everything runs smoothly. They keep a close eye on any signs of trouble and take steps to handle problems before they get big. If things get really bad and no solutions are found, the RBI may have to limit some bank activities to protect the public and the financial system.
Recently, the RBI has taken actions against companies like Paytm Payments Bank, JM Financial, and IIFL Finance to ensure they are following the rules. In October, they stopped four NBFCs, including Navi Finserv, from giving loans because of issues with their management.
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