RBI RELEASES THE FINANCIAL STABILITY REPORT (SR) JULY 2020

RBI RELEASES THE FINANCIAL STABILITY REPORT (SR) JULY 2020 

• FSR is a bi-annual report that reflects risks to financial stability and the resilience of the financial system. 
• The report gives various scenarios for the impact of COVID-19 pandemic on different indicators (refer to infographics). 
• GDP growth: shows contraction in all scenarios. 
• Combined gross fiscal deficit-to GDP ratio (including Centre and States) is expected to exceed 1096 in all scenarios. 
• The current account balance to GDP ratio is expected to fall, indicating a higher fall in exports as compared to imports. 
• Other key findings 
• Gross Non-Performing Assets (GNPA) ratio of all Scheduled Commercial Banks may increase from 8.5% in March 2020 to 12.5% by March 2021 under the baseline scenario. 
• NBFCs: Declining share of market funding for NBFCs is a concern as it has the potential to accentuate liquidity risk for NBFCs as well as for the financial system. 
• Risks to global economic prospects: overleveraged non-financial sector, simmering global geopolitical tensions, and economic losses on account of the pandemic. 

Source: RBI