- RBI in its Monetary Policy had reduced the Repo rates by 0.25 percent which is now 6.25%. This was expected to ease the lending position of the State-Run banks.
- RBI had in the monetary committee meeting tweaked norms for risk weights on a bank loan to NBFCs with an effort to ease the capital position of the banks, which could otherwise help them more in lending.
- On the contrary, banks have preferred to shore up their capital instead of increasing their lending portfolio.
- During the last one and half years, it is seen that PSBs have only made efforts to consolidate their loan books and thus bring down their exposure to risky assets.
- Though the Centre had infused a huge capital of Rs. 88,000 crore into the PSBs, in the year 2018, they have either reduced their loans portfolios or increased the loan books marginally.
- More important factor is that the risk-weighted assets (RWAs) have been reduced which reveals that they have concentrated more in safeguarding themselves and avoid increasing the risky loan assets portfolio.
- During the period September 2017 to December 2018 quarters, the RWAs for most of the PSBs have been brought down by 15-20 percent. The latest position of their capital position is depicted in the picture above.
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