In this week’s banking brief, we’ll talk about the second chapter of the Financial Stability Report 2020, that sets out to evaluate the soundness and resilience of banks and NBFCs.
The deterioration in the macroeconomic and financial environment globally and domestically, impinged on credit demand, asset quality, capital adequacy and profitability of scheduled commercial banks which are bracing up for the fuller impact of COVID-19.
The first section presents an assessment of SCBs’ credit performance, asset quality, capital adequacy and risks. It also evaluates their resilience against macroeconomic shocks through stress tests for credit risk.
The second section undertakes an examination of recent performance of scheduled urban cooperative banks (SUCBs) and the results of stress tests for credit and liquidity risks.
The third section discusses the major financial parameters of NBFCs, the recent disruptions in the sector and the results of stress tests at system level as well as for individual NBFCs.