The RBI report expresses concern over the dependence of finance companies on banks for funding and highlights the need for broad-basing their funding sources. It also raises concerns over banks’ lending to borrowers who can influence the lender’s decision, leading to compromise in pricing and credit management. The report states that the asset quality of Indian banks is at a decadal high, with gross non-performing assets falling to 3.2% at the end of September. The consolidated balance sheet of banks grew by 12.2% in 2022-23, and the share of PSBs declined while private banks gained a share.
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