Demonetisation, GST have potential to transform India; NPAs key risk: RBI

RBI today said GST and demonetisation have the potential to transform the economy, “notwithstanding some inconvenience to public and momentary adverse impact on growth”, even as it flagged elevated risks due to continuous deterioration in banks’ asset quality.

It also observed that while the financial performance of the corporate sector has improved in 2016-17, the risk of lower turnover remains. It also said large borrowers registered significant deterioration in their asset quality,

“The measures such as transition to the nationwide GST and the withdrawal of legal tender status of specified bank notes (old Rs 500/1000) could potentially transform the domestic economy, notwithstanding some inconvenience to public and the momentary adverse impact on growth,” RBI said.

These observations were made in the Report on Trend and Progress of Banking in India 2015-16 (RTP) and the 14th issue of the Financial Stability Report (FSR).