After opening close to 1,500 branches in 2022-23, HDFC Bank, the country's largest private sector lender, will continue expanding its branch network at the same speed in the current financial year. The lender says branch expansion is crucial for deposit mobilisation. As of March 31, 2023, HDFC Bank had 7,821 branches, up from 6,342 a year ago.
Higher for longer' may be the narrative in the developed markets, but interest rates might not stay high for very long in India, with a section of the market expecting rate cuts to begin this year. The six-member Monetary Policy Committee of Reserve Bank of India (RBI) decided to keep interest rates unchanged at 6.5 per cent in the April review - after hiking the policy repo rate in six previous meetings. RBI Governor Shaktikanta Das emphasised that the pause was only for the April policy and that the central bank was ready to act if the situation demanded.
'Given that debt AIFs, by nature, target a higher portfolio return, it is likely to attract investors like HNIs, family offices, etc, looking for a higher yield debt product.'
By the end of March 2022, only 2,140 million pieces of Rs 2,000 denomination currency notes were in circulation, or 13.8 per cent of the total value of notes.
The Reserve Bank of India is likely to take a call on the relaxations sought by HDFC Bank in relation to the merger, as the date of merger draws closer, sources said. The HDFC twins, which announced their decision to merge in April last year, received National Company Law Tribunal's (NCLT's) approval recently - a key milestone to close the deal in due time. The management of both the entities had said that it will take 15-18 months for the merger.
The recent run on the US-based Silicon Valley Bank (SVB) and the subsequent seizure of its assets by the regulators may have sparked a global wave of risk aversion, particularly for start-ups. However, the Indian banking sector is unlikely to be a victim of any contagion effects, said analysts. he bank, which played a big role in financing start-ups and technology players, faced stress after incurring huge losses on its holdings of US bonds, following the most-aggressive monetary tightening cycle by the Federal Reserve in around four decades.
Indian government bonds, particularly those of shorter maturity, strengthened sharply on Monday, as the collapse of the California-based Silicon Valley Bank (SVB) prompted investors to rush to the safety of American debt, leading to a decline in US bond yields.
'Citibank customers will migrate to the Axis Bank platform over 18 months.'
In the first such collaboration for India, the country's flagship payments platform, the Unified Payments Interface (UPI), and Singapore's PayNow payment system have launched a real-time cross-border payment linkage system. The linkage, which was launched by Prime Minister (PM) Narendra Modi and Singapore's PM Lee Hsien Loong on Tuesday, was kicked off by a live cross-border transaction between Reserve Bank of India Governor Shaktikanta Das and Monetary Authority of Singapore managing director Ravi Menon, using mobile phones.
Indian Bank expects recoveries to be more than slippages in this financial year, which will result in improved asset quality.
Lead indicators suggest that domestic current account deficit (CAD) is likely to reduce in 2023, while macro-economic stability has received a boost from inflation being brought back to the official tolerance band, according to the Reserve Bank of India's (RBI's) January 2023 Bulletin. "With the merchandise trade deficit reaching an all-time high of $83.5 billion in a quarter, and a rise in net outgo from the income account, the current account deficit increased to 4.4 per cent of GDP in Q2FY23," the State of the Economy article in the bulletin said. "It is noteworthy, however, that the CAD for Q1 was revised down from 2.8 per cent to 2.2 per cent on account of downward adjustment in Customs data.
State Bank of India (SBI) may carry out a planned Rs 10,000 crore sale of infrastructure bonds in the market this week, with the securities likely to be of 15-year maturity, sources told Business Standard. SBI, the country's largest bank, had last week said its board had approved the issuance of infrastructure bonds in the current fiscal year. It, however, had not mentioned the maturity of the bonds or when the sale would take place.
The Indian rupee is expected to trade between 80 and 84 against dollar in the first three months of 2023 with support from overseas inflows though worsening current account deficit (CAD) and reduced interest rate differential between the US and India pose challenges. According to a Business Standard Poll of 10 participants, most said the rupee could gain strength in January due to foreign inflows, and the Reserve Bank of India (RBI) is not expected to allow the currency to depreciate ahead of the Union Budget scheduled on February 1. The rupee depreciated 10.15 per cent in 2022, its worst performance since 2013 as the war in Europe and the interest rate increase by the US Federal Reserve prompted investors to flee emerging markets.
The year 2022 saw the Reserve Bank of India (RBI) start acting on the policy repo rate after a gap of two years. The six-member monetary policy committee of the RBI reduced interest rate sharply - by 115 bps - when Covid-19 struck in 2020. In March 2020, days after the nationwide lockdown was announced, MPC in an unscheduled meeting reduced the repo rate by 75 bps, followed by another 40 bps in May. Status quo was maintained for the next two years since the May repo rate hike.
The health of Indian banks continued to improve in 2021-22 with their balance sheet growing at double digits after a gap of seven years and their asset quality and capital position bettering, the Reserve Bank of India (RBI) said in its annual report on trend and progress of banking in India. At the same time, the banking regulator flagged the issue of slippages from restructured accounts. "Going forward, it is imperative that banks ensure due diligence and robust credit appraisal to limit credit risk," the report said.
In order for life insurance customers to attain maximum benefits, it is crucial for the persistency ratio to be far higher than its current level, top executives of the industry said at the Business Standard BFSI Insight Summit on Thursday. The persistency ratio is a metric that measures the number of policyholders who continue paying renewal premium and is gauged at varying stages in the life of a policy. A higher persistency ratio is seen as an indicator of an insurance product that caters satisfactorily to the needs of a customer.
The members of the Reserve Bank of India's (RBI's) Monetary Policy Committee (MPC) voiced different views on the interest rate and stance, with two of them indicating they may not vote for further rate increases even if Governor Shaktikanta Das and Deputy Governor Michael Patra maintain bringing down inflation as their primary objective, the minutes of the December review of the monetary policy showed. The other two members remained neutral. The MPC increased the policy repo rate by 35 basis points (bps) - which was lower than the previous three hikes of 50 bps. The repo rate has been hiked by 225 bps to 6.25 per cent since May this year.
The Lok Sabha elections in 2024 are not a consideration when it comes to monetary policymaking, said Reserve Bank of India governor Shaktikanta Das to underscore the central bank's commitment to controlling inflation. "It's not possible for me to comment what we do in the next MPC (Monetary Policy Committee), but one thing I can tell and I would like to make it very clear-that the fact of elections coming up in 2024 is not a factor at all so far as monetary policymaking is concerned. "Monetary policymaking is for checking (and) controlling inflation," Das said at the Business Standard, BFSI Insight Summit.
Liquidity in the banking system has slipped into a deficit for the first time in three weeks, prompting banks to borrow the largest quantum of funds from the Reserve Bank of India (RBI) in around a month and a half. The key catalyst for the sudden tightening in liquidity was due to outflows on account of advance tax payments, which occur towards the end of a quarter. Analysts also cited other factors such as a currency leakage and possible interventions by the RBI in the foreign exchange market, which contributed to the tighter liquidity conditions.
Despite the demonetisation of 2016 and the rise in digital transactions that followed, the economy's dependence on cash has remained as high as ever. So when the Reserve Bank of India (RBI) introduced a pilot project of its version of digital cash - called the central bank digital currency (CBDC) - on December 1, many questions were asked. Can the CBDC replace physical cash, even partially? Can it match cash in terms of convenience? Are CBDC transactions truly anonymous?
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