The Reserve Bank of India has warned that the impact of the pandemic is showing up in muted credit growth as banks remain largely risk-averse. The central bank also issued an alert on asset quality on its annual report on trends and progress in banking.
There is some uptick seen in credit growth for the current financial years as per data available so far, but RBI says that risk aversion is very clearly visible in the muted credit growth that we are seeing.
It also warns that stress could rise because of the inherent risk in the restructured portfolio and going ahead, the bank's asset quality could get dented and it specifically warned that NBFC asset quality could see a further hit, in terms of recovery IBC remains the best tool.
Watch the accompanying video of CNBC-TV18’s Ritu Singh for more details.