The Reserve Bank has said that despite the recession, the country's financial system remains stable. The bank believes that demand on the domestic front has been weak in the second quarter of 2019-20. There are risks in every sector of the economy, but there is scope for improvement in the banking sector in the next one year. The Reserve Bank in its Financial Stability Report states that the situation under the Insolvency and Bankruptcy Code is continuously improving in terms of dealing with stressed assets.

Currently, the report has expressed concern over the slowing of bank credit. According to the report, credit growth of PSBs in September 2019 was 8.7%, which is lower than the previous year. But the performance of private banks has been better in this case. These banks have recorded an increase of 16.5% in bank credit. According to the Reserve Bank, in September 2019, the capital adequacy ratio of public sector banks has also improved to 15.1%. This happened due to recapitalization in banks. As far as the NPAs of banks are concerned, the ratio of NPAs has remained at 9.3% during the period March to September 2019. On the domestic front, demand remained low in the second quarter of the current financial year, according to the report. The trend of capital flows also remains positive. However, the situation regarding exports remains worrying.

According to RBI, there has been a decrease in the country's exports due to the global recession. But due to softening of crude oil prices, the current account of the government is under deficit control. It is being told that in the second quarter of the current financial year, the GDP rate has come down to a six year minimum of 4.5%. Given the slow pace of economic growth, the Reserve Bank has had to continuously reduce interest rates. The Reserve Bank also asked all banks to link the rate of loan to the repo rate, which is now five per cent.

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