NEW DELHI, Jan. 3 -- The Reserve Bank of India (RBI) on Friday, 27 December, cautioned that the asset quality of scheduled commercial banks (SCB) may worsen next year owing to changes in the macroeconomic scenario.
In its latest Financial Stability Report, the central bank also warned that there remains an inherent risk of "froth"-conditions that precede a market bubble-building up in the system due to excess liquidity.
Citing factors such as an increase in slippages and declining credit growth, the central bank in its biannual commentary said bad loans of SCBs as a percentage of total loans is expected to increase to 9.9% by September 2020 from 9.3% in September 2019.
This marks a revision of its projection made six months ago, when it ...