Economic shock of pandemic ‘has held up well’ to banking system: EcoSurvey

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New Delhi, Jan. 31 (IANS): So far, the economic shock of the pandemic has been “well weathered” by India’s commercial banking system, according to the Economic Survey 2021-22.

“…Although a lagged impact is still ongoing,” said the inquiry, tabled in parliament by Union Finance Minister Nirmala Sitharaman on Monday.

According to him, the growth of reserves and broad money supply in 2021-22 was so far lower than in the previous year.

The Study noted that the growth in money supply has not fully translated into a commensurate growth in broad money supply due to the smaller (adjusted) money multiplier reflecting the banks’ large deposits with the RBI. within the framework of the reverse repurchase window.

“Bank credit growth has gradually accelerated in 2021-22, from 5.3% at the start of April 2021. The latest data shows that bank credit growth stands at 9.2% as of 31 December 2021.

“At the sector level, credit to the agricultural sector continued to record robust growth and showed signs of improvement in the industrial sector. Credit growth to the services sector, however, has yet to pick up.”

The gross ratio of non-performing advances from scheduled commercial banks (SCB) continued to decline, from 11.2% at the end of 2017-2018 to 6.9% at the end of September 2021. Similarly, the net ratio of non-performing advances fell from 6% to 2.2% over the same period.

“The capital to risk-weighted assets ratio of SCBs continued to increase, from 13% in 2013-2014 to 16.54% at the end of September 2021.

“The return on assets and return on equity of public sector banks turned positive in June 2020 and continued to be positive for the period ending September 2021, after recording negative profitability ratios from March 2016 to March 2020. 2020.”

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