The Central Bank must adapt to changes at the regulatory perimeter, with an eye to new or unregulated areas. 5. Good supervision is conclusive. Supervisors must follow through conclusively on matters identified as these issues progress through the supervisory process to their final resolution. The Central Bank must take every identified issue, however, small, to its conclusion. Judgement, not rules, is the key here.
The gross NPA (GNPA) ratio of the banking system at 9.6 per cent and the stressed advances ratio at 12 per cent as of March 31, 2017, on the back of persistently high ratios in the past few years is, indeed, a matter of concern.