That is why, in New Zealand, we introduced the disclosure regime at a time when the financial system was in a strong position and therefore when disclosure would assist in maintaining confidence in the banking system, rather than detracting from it. Finally, the effectiveness of market disciplines through public disclosure will obviously be influenced by the infrastructure within which banking operates.
Commercial banks’ net profits remained at 0.9 per cent of total assets during 2004-05 and 2005-06, up from 0.16 per cent in 1995-96. The ratio of NPLs to total loans of scheduled commercial banks, which was as high as 15.7 per cent at end-March 1997, declined steadily to 3.3 per cent by end-March 2006.