The Reserve Bank of India (RBI) released its Report on Trend and Progress of Banking in India for 2022-23 on December 27, revealing significant insights into the financial landscape:

Consolidated Balance Sheet Growth: The combined balance sheet of scheduled commercial banks (SCBs) expanded by 12.2% in the fiscal year 2022-23. This growth was primarily propelled by increased lending to the retail and services sectors. Deposit growth also rose, albeit at a slower pace compared to credit growth.

Factors Driving Expansion: The expansion was attributed to higher net interest income and reduced provisioning, which consequently improved the net interest margin (NIM) and profitability of banks in 2022-23.

Asset Quality Improvement: The report highlighted the sustained improvement in the asset quality of banks, a trend that commenced in 2018-19 and continued through 2022-23. The gross non-performing assets (GNPA) ratio stood at 3.2% by the end of September 2023.

Capital Adequacy: The capital to risk weighted assets ratio (CRAR) of SCBs was reported at 16.8% by the end of September 2023, meeting the regulatory minimum requirement. The common equity tier 1 (CET1) ratio was also in compliance with regulatory norms across all bank groups.

Urban Co-operative Banks (UCBs): The consolidated balance sheet of UCBs grew by 2.3% in 2022-23, mainly driven by increased loans and advances. Notably, UCBs exhibited improvements in capital buffers and profitability during the period.

Non-Banking Financial Companies (NBFCs): The consolidated balance sheet of NBFCs expanded by 14.8% in 2022-23 due to substantial credit growth. The sector also demonstrated improved profitability and asset quality, maintaining a higher capital adequacy ratio (CRAR) than regulatory requirements.

Statutory Requirement: The report, mandated by Section 36 (2) of the Banking Regulation Act, 1949, provides an overview of the banking sector's performance, encompassing co-operative banks and NBFCs.

Overall, the report underscores the growth and positive performance of the banking sector, highlighting improvements in asset quality, capital adequacy, profitability, and the continued expansion of financial institutions like SCBs, UCBs, and NBFCs during the stated period.

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