As the world economy slowly rises from the ravages of the transition period of the COVID-19 pandemic, economic mechanisms are gaining momentum, not evenly, but unevenly. With crude oil prices rising sharply, inflationary pressures are mounting and global policy uncertainties pose major risks. Domestically, high frequency indicators of activity are forming as the second wave ends. While banks and other financial institutions have flexible capital and liquidity reserves, and balance sheet stress remains moderate despite the pandemic, bank-credit growth across all bank groups within the second half of 2019-20  has decreased. The profitability ratio of scheduled commercial banks has improved. There has been some decline in the second half of Financial Year 2019-20, Financial Year 2019-20 as compared to Financial Year 2018-19 and credit classification has come down due to the effect of the moratorium. The macro-stress test for diposit risk indicates that the gross non-performing asset ratio of NBFCs under the baseline scenario increased from 8.5 per cent in March 2020 to 12.5 per cent by March 2021.  The system-level 1 capital to risk-weighted asset ratio fell from 14.7 per cent in March 2020 to 13.4 per cent by March 2021.  NBFCs have grown. A diminishing interbank market with a higher capital stop stock minimizes the risk of transmission through the financial network. The present research paper suggests that banks should be given buffers along with closely monitoring the NBFC and retail loan portfolios. Governance needs to be strengthened, reformed and alerted.

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Keywords: Bank Credit, NBFCS, Commercial Banks, Credit Growth, Corporate.