According to the Reserve Bank of India, the Indian banks have shown remarkable performance in fiscal 2020. The lenders have reported a profit for the fiscal year after reporting losses for the last two years. The bank’s bad loans fell and the capital seemed to improve. However, according to the RBI, banks have to be vigilant from the rivals, to continue the streak of profits.
The RBI is concerned with rolling back the support that was given to the banks during the pandemic caused by Covid-19 in the last eight months. The regulator said that in 2020-2021, as the policy support is slowly rolled back, the impact of the Covid-19 pandemic may finally start to affect the health of the banks and non-banks, in the report of the Trends and Progress of Banking in India. According to the RBI, the improvement of the banks depended on the pace with which the economy of India grows.
As the economy changes for the better, the conditions of the banks and non-banking financial companies will also improve. The challenge here is to make certain necessary changes carefully and monitor them to the best of the abilities. The RBI also said that a moratorium had been availed for, in August 2020, on approximately 40% of the already existing loans within the financial system, which included banks as well as any other non-banking lenders. According to reports, the moratorium was a little higher among MSMEs customers. In fact, the data showed that around 78% of such customers have availed of the facility.
In fact, the fiscal year of 20201 will be dangerous precedence for all banks and non-banking financial companies as they will have to tread lightly with all the new regulations and changes taking place. This profit by the banks has been a first in the last two years. It has also been an unexpected change. Provisions have to be made to see to it that the profit continues.
