Mumbai: Indian banks' gross bad loan ratio may rise from a 12-year low if risks emanating from credit quality, interest rates and geopolitics play out, the Reserve Bank of India (RBI) said in its December Financial Stability Report published on Monday. Gross bad loan ratio is the proportion of bad assets to total loans. This key measure could rise to 3 per cent by the end of March 2026 from a 12-year low of 2.6 per cent in September 2024 for 46 banks under the so-called baseline scenario, the central bank said.
The bad loan ratio could rise to 5 per cent and 5.3 per cent under two separate high-risk scenarios, it said. However, while the aggregate capital ratios of banks may reduce, no lender will fall short of the minimum capital requirement of 9 per cent even in adverse cases, the central bank noted.
The report revealed that the monetary penalties imposed by the RBI on regulated entities from June to November have come down to nearly Rs 30 crore as against over Rs 57 crore in the same period a year ago.
Meanwhile the central bank on Monday announced that it has asked the National Payments Corporation of India to develop a facility to allow customers using online fund transfer systems, RTGS and NEFT to verify the name of the bank account to which money is being transferred before initiating the transaction for avoiding mistakes and preventing frauds. Banks have to offer this facility no later than April 1, 2025, the Reserve Bank said in a circular on Monday. Currently, the Unified Payments Interface (UPI) and Immediate Payments Service (IMPS) systems enable a remitter to verify the name of the beneficiary before initiating a transfer.