New Delhi: India’s monetary and financial sectors have performed well in the first nine months of the Financial Year 2024-25 with the gross NPAs of banks now down to a 12-year low of 2.6 per cent at the end of September 2024 while their profitability improved during H1 of FY25, with profit after tax surging by 22.2 per cent year-on-year, the Economic Survey stated.
Bank credit has grown at a steady rate in the current financial year while deposits continue to exhibit double-digit growth. As of the end of November 2024, the YoY growth in aggregate deposits of scheduled commercial banks stood at 11.1 per cent, it states.
The survey highlights that sector-wise, the growth in agriculture credit as of November 29, 2024, in the current financial year was 5.1 per cent. The growth in industrial credit picked up and stood at 4.4 per cent as of the end of November 2024, higher than the 3.2 per cent recorded a year ago. Across industries, bank credit to micro, small, and medium enterprises (MSMEs) has been growing faster than credit disbursal to large enterprises. As of the end of November 2024, credit to MSMEs registered a YoY growth of 13 per cent, whereas it stood at 6.1 per cent for large enterprises.
Rural Financial Institutions also show lower NPAs and better credit off-take. The consolidated net profit of Regional Rural Banks (RRBs) increased from Rs 4,974 crore in FY23 to Rs 7,571 crore in FY24. The consolidated Capital to Risk (Weighted) Assets Ratio, (CRAR) rose from 13.4 per cent as of March 2023 to an all-time high of 14.2 per cent by March 31, 2024. Credit to deposit ratio of RRBs grew from 67.5 per cent in March 2023 to 71.2 per cent in March 2024.
During the first nine months of FY25 (April 2024-December 2024), the Monetary Policy Committee (MPC) of the RBI, in its various meetings, decided to keep the policy repo rate unchanged at 6.5 per cent to balance the twin requirements of maintaining growth and keeping inflation within acceptable limits. The Survey points out that system liquidity, represented by the net position under the Liquidity Adjustment Facility, remained in surplus during October-November 2024.
The Survey notes that the government also achieved significant progress in financial inclusion, with the Financial Inclusion Index of the Reserve Bank of India (RBI) increasing from 53.9 in March 2021 to 64.2 at the end of March 2024. Rural Financial Institutions (RFIs) have been an important player in facilitating India’s financial inclusion journey. Development Financial Institutions (DFIs) have contributed significantly to the country’s economic progress by financing infrastructure development projects.
(IANS)
