Contact Your Financial Adviser Money Making MC
22
December 2017
 |
RBI (The Total Investment
& Insurance Solutions)
In
its report on the trends and progress of the banking sector in India in
FY16-17, the Reserve Bank of India (RBI) has listed stressed assets of public
sector banks (PSBs) and low credit growth as two of the many major challenges
facing the sector in the coming years. This Report presents the performance and
salient policy measures relating to the banking sector during the past
year.
The
report points out that while subdued profits were posted by the public sector
banks, the PSBs continued for the second year in a row to languish under the
heavy burden of non-performing assets (NPAs), for which the RBI has initiated
damage-control measures such as large-scale bank recapitalisation plan in
October 2017 and the Insolvency and Bankruptcy Code (IBC) in 2016.
The
enactment of the IBC in May 2016 effectively empowered the RBI to issue
directions to any banking company or banking companies to initiate insolvency
resolution in respect of a default under the provisions of the IBC.
Against
the gloomy scenario of the PSBs, the report records the upbeat performance of
the co-operative institutions, which include urban co-operative banks
(UCBs), the apex-level long-term rural credit co-operatives, the short-term
rural credit co-operatives comprising state co-operative banks (StCBs) and
district central co-operative banks (DCCBs). Primary agricultural credit
societies (PACS), the grass-root level tier of the short-term co-operative
credit structure, however, continued to incur losses.
The
report notes the policy measures initiated in the payment and settlement
systems to ensure robust and customer friendly payment systems, under which the
Master Directions on Pre-paid Payment Instruments (PPIs) were issued.
Reinforcing
its commitment to financial inclusion, RBI operationalised small finance banks
and payments banks during the fiscal.
Healthy
growth of loans and advances triggered an improvement of the balance sheets of
the non-banking financial companies (NBFCs), whose profitability, however,
plunged due to the deterioration in asset quality.
To
address the issues highlighted by the report, the RBI has set for itself
several goals in the coming year, which include developing robust accounting
standards for banks with the aim of closing gaps in accounting practices and
promoting differentiated banking and exploring scope for its expansion to
wholesale and long-term financing.
The Total Investment & Insurance Solutions
While
intensifying the focus on promoting digitisation and managing
technology-enabled financial services, RBI also plans to roll out effective
measures to manage cyber-security risks with the aim of strengthening
resilience of the financial system.The Total
Investment & Insurance Solutions
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