Page 54 - BFSI CHRONICLE 10 th Issue (2nd Annual Issue ) 23062 COPY.indd

BFSI Chronicle, 2 Annual Issue, 10 Edition July 2022
nd
th
 Reduction in loan concentrations raising additional capital
in identified sectors, industries or
borrowers  Requiring the NBFC to bolster reserves
through retained profits
 Sale of assets
 Restriction on investment in
 Action plan for recovery of assets through subsidiaries/associates, expansion of
identification of areas (geography-wise, high risk-weighted assets to conserve
industry segment-wise, borrower- capital, increasing stake in subsidiaries
wise, etc.) and setting up of dedicated and other group companies
Recovery Task Forces, etc.
 Reduction in exposure to high-risk
 Prohibition on expansion of credit/ sectors to conserve capital
investment portfolios other than Conclusion
investment in government securities /
other High-Quality Liquid Investments Macro stress tests for credit risk indicate that
the gross non-performing asset (GNPA) ratio
 Higher provisioning for NPAs/NPIs of SCBs may increase from 6.9 per cent in
September 2021 to 8.1 per cent by September
Profitability related Actions - 2022 under the baseline scenario and to 9.5

 Restrictions on capital expenditure, other per cent under a severe stress scenario. SCBs
than for technological upgradation within would, however, have sufficient capital, both at
Board approved limits & Restrictions/ the aggregate and individual levels, even under
reduction in variable operating costs stress conditions. Emerging signs of stress in
micro, small and medium enterprises (MSME)
Operations related Actions as also in the micro finance segment call for
 Restrictions on branch expansion plans; close monitoring of these portfolios going
domestic or overseas, entering into forward. The Indian economy was already
new lines of business, in undertaking struggling with high fiscal deficit, demand
businesses, as may be specified, contraction and poor health of our financial
in outsourcing activities, on new institutions, banks and NBFCs. The pandemic
borrowings has put further stress on all economic activities.
Most of the corporates have put on hold
 Reduction in business at subsidiaries/ in their expansion plans and this will directly
other entities, in leverage, in risky assets
impact employment generation. All of this
 Any other specific action that the RBI has adversely affected the financial strength
may deem fit considering specific of the corporate sector and banks may need
circumstances of the NBFC. to make more provisions for NPAs. This will
ultimately impact the financial health of banks
Capital related Actions and NBFCs, which are already struggling.
 Detailed Board level review of capital Unemployment is increasing at a very fast
planning rate but more investment in infrastructure
will generate employment and increase the
 Submission of plans and proposals for purchasing power.

The Institute Of Cost Accountants Of India

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