Economic stress tests

External sector remains a source of risk

Some of the numbers reported in the Reserve Bank of India’s (RBI’s) Financial Stability Report (FSR) should be comforting for policymakers. After years of stress, the banking sector is looking in good shape. Gross non-performing assets (GNPAs), which have been witnessing a steady decline for some time, were at a seven-year low of 5 per cent in September. Net NPAs also declined to a 10-year low of 1.3 per cent. The level for the private sector was less than 1 per cent. Provisioning coverage has increased, while the net profit for scheduled banks jumped by over 40 per cent in