The Gross Non-Performing Assets (GNPAs) across all scheduled commercial banks dropped to its lowest level in six years, as per the Reserve Bank of India's (RBI) annual report for 2021-22.
The report covers the working and functions of the central bank for the period from April 2021 to March 2022.
It warns global recovery this year could suffer a significant loss of momentum this year, with negative external effects affecting the financial and commodity markets, surging food and fuel prices adversely impacting the disadvantaged sections of society.
First, here are the key highlights of how the last year went:
1. The report points to the ill effects of the Russia-Ukraine war saying that the global macro outlook is overcast with the economic costs of the war and sanctions. Moreover, emerging markets (like India) and developing economies have had to bear the brunt of the spillovers, despite being bystanders.
2. A related point to the war is the elevation in crude prices, metals and fertiliser which have translated into a term of trade shock. Meanwhile, the central bank has had to deal with capital outflows and sizeable currency depreciation.
3. In spite of headwinds, India’s merchandise exports hit a record $421.9 bn in 2021-22.
4. The financial saving of the household sector — the most important source of funds — surged by 3.6 percent points to 11.5 percent of the Gross National Disposable Income (GNDI) in 2020-21, the highest in over two decades.
5. The banking sector was cushioned against the disruptions caused by the pandemic with adequate liquidity support and various regulatory dispensations provided by the Reserve Bank.
6. Positives on the tax front: States’ revenue and capital receipts posted strong recoveries after the COVID-19 pandemic. The central tax devolution also exceeded the centre’s budget estimates.
7. Bank check: Gross NPA ratio of scheduled commercial banks at the lowest level in six years. The balance sheet of NBFCs expanded but asset quality deteriorated.
8. RBI’s balance sheet — Transferred Rs 1.14 lakh cr to contingency fund in FY22. Supply of notes at 2.22 lakh pieces, 0.36 percent lower than 2020-21.
9. Income and transfer to govt: FY22 total income up 20 percent at Rs 1.60 lakh crore versus Rs 1.33 lakh crore last year. Surplus transferred to govt at Rs 30,307 crore vs Rs 99,122 crore last year.
10. During 2021-22, banks, with Rs 17,09 lakh crore, achieved 104 percent of the target for agricultural credit of Rs 16.5 lakh crore as on March 31, 2022.
11. The number of banking outlets in villages — including branches, banking correspondents, and other modes — increased from just 67,694 in March 2010 to 12.53 lakh by December 2020 and further to 19 lakh by December 2021.
Below is the economic outlook as seen by the central bank: