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Informist, Wednesday, Dec. 31, 2025

 

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--RBI:Stress tests show bks capital adequacy ratio may fall to 16.8% Mar '27 
--RBI:Stress tests show all bks' capital adequacy ratio above 9% requirement 
--RBI: Stress tests show bks gross NPA ratio improving to 1.9% by Mar 2027 
--RBI:Stress tests show bks gross NPA ratio at 3.2-4.2% in adverse scenarios 
--RBI:Stress tests show bks gross NPA rising to 8.1% under more severe shocks 
--RBI:Bks' gross NPA ratio may rise 520 bps if top 3 borrower groups default 
--RBI:All bks' capital above regulatory threshold if top 3 borrowers default
--RBI report:Unrealised profit in bks' HTM portfolio INR 431.37 bln Sept-end 
--RBI report: State bond holdings up, gilts down in banks' HTM portfolios 
--RBI report:Bks gross NPA ratio may rise 350 bps if top 3 borrowers default 
--RBI report:Stress tests show cos can keep capital buffers more than needed 
--RBI report:Stress tests reaffirm fincl cos resilient to losses in adversity 
--RBI report: Stress tests reaffirmed bks' resilience to adverse econ shocks 

 

NEW DELHI – Macro stress test results show scheduled commercial banks can withstand losses under hypothetical adverse scenarios and maintain capital buffers well above the regulatory minimum, the December edition of the Reserve Bank of India's Financial Stability Report said Wednesday. 

 

The stress test results revealed that the aggregate capital to risk-weighted assets ratio of 46 major scheduled commercial banks may drop from 17.1% in September 2025 to 16.8% by March 2027 under the baseline scenario. It may fall to 14.5% and 14.1% under the hypothetical adverse scenarios. However, none of the banks would fall short of the minimum CRAR requirement of 9% even under the adverse scenarios, it said.

 

"The scheduled commercial banks, urban cooperative banks and non-banking financial companies remained sound with robust capital and liquidity buffers, demonstrating ongoing improvement in asset quality, and maintaining steady profitability," the report said. "Stress test results at the aggregate level reaffirmed the resilience of these financial entities to withstand losses under adverse scenarios and to maintain capital buffers well above regulatory minimum levels. Asset management companies, clearing corporations and insurance sector also remained sound."

 

On the asset quality front, the stress test showed that aggregate gross non-performing asset ratio of banks may improve from 2.1% in September 2025 to 1.9% in March 2027 under the baseline scenario. It may rise to 3.2%-4.2% under adverse scenarios. 

 

Further, under the more severe shock scenario, the aggregate gross non-performing asset ratio of banks would rise from 2.1% to 8.1%, which would cause depletion in the CRAR and Common Equity Tier 1 capital ratios by 380 basis points and 370 bps, respectively. However, both the capital ratios would remain well above the respective regulatory minimum levels, it said. 

 

"Stress tests on banks' credit concentration showed that in the extreme scenario of default in payment by the top three individual borrowers, in terms of standard exposure of respective banks, the system level GNPA ratio would rise by 350 bps, and CRAR and CET1 ratio would decline by 90 bps and 80 bps, respectively," the report said. On the other hand, if top three group borrowers fail to repay, the impact would be more severe in the form of 520 bps rise in the GNPA ratio and 130 bps fall in both capital ratios. However, CRAR of none of the banks would fall below the regulatory minimum in both the cases, it said. 

 

Both public sector and private sector banks increased the holding of state government securities in the held-to-maturity portfolios. At the same time, these banks pared their holdings of central government securities and other held-to-maturity -eligible securities. Foreign banks had minimal holding of state bonds and sizeable share of other securities, the report said.

 

As of end-September, the notional marked-to-market gains in the held-to-maturity books of public sector and private sector banks together decreased to INR 431.37 billion from INR 641.48 billion from end-March. "Unrealised gains declined across most categories of the HTM (held-to-maturity) book. Unrealised gains of PSBs (public sector banks) were predominantly in corporate securities and others," it said.  End

 

Reported by Pratiksha

Edited by Vandana Hingorani

 

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