Mumbai: The Reserve Bank of India (RBI) warned on Monday that India’s Rs. 81 trillion banking industry faces higher risks because of increasing bad loans and restructuring of debt by stressed corporate borrowers. Stubbornly high inflation, too, remains a major concern, the central bank said in its biannual financial stability report (FSB).

Risks to the banking sector have increased since the previous FSB was published on 27 June, RBI said.  “All major risk dimensions captured in the banking stability indicator show increase in vulnerabilities in the banking sector,” the report said. “Asset quality continues to be a major concern for scheduled commercial banks (SCBs). The gross non-performing assets (NPA) ratio of SCBs as well as their restructured standard advances ratio have increased.”    Reserve Bank of India Looking at Grim Future