Banking sector is on "course to recovery" with non-performing assets (NPAs) receding, said the Reserve Bank of India (RBI) on Monday, cautioning against the "protectionist trade policies" of rich nations.

The credit growth of commercial banks has improved between March 2018 and September 2018, driven largely by the private sector, said the RBI in its Financial Stability Report for December.

Asset quality of banks has improved with gross non-performing assets (GNPA) ratio declining from 11.5 per cent in March 2018 to 10.8 per cent in September 2018.

Banks' gross NPAs may decline to 10.3 per cent in March 2019 from 10.8 per cent in September 2018 under stress scenario, said the report.

The report said global growth outlook for 2018 and 2019 was "steady", but said protectionist trade policies and global geopolitical tension have significantly increased.

Bhaswar • Now