Is the worst over for Indian banks? The past two years saw them ride on treasury trades as deposits soared and credit growth dipped sharply. Gross and net non-performing assets (NPAs) moved south, and the provision coverage ratio (PCR), capital buffers, and profitability indicators are back at pre-pandemic levels. So, what's the plot ahead?
Since April, India has seen multiple strains of the coronanavirus sweep the nation, upending life and businesses alike. Out-of-home retail and discretionary categories such as durables, auto, fashion, lifestyle, hospitality, food services, travel, and tourism have been the worst-hit as Covid cases remain high, leaving state governments with no option but to curtail mobility and economic activity.
DEA is currently headed on an interim basis by Corporate Affairs Secretary Tapan Ray
If the policy is extended to NBFCs and co-operative banks, they will have to disclose divergence in asset classification and provisioning during RBI inspections in their audited financial reports. Till now, these entities have been exempted from this. At present, there are more than 98,000 co-operative banks and 10,000 NBFCs. Sources said the RBI would concentrate on the top 50 co-operative banks and NBFCs.
Industrial output rose to nearly three-year high of 6.4% in August.
"The Monetary Policy Committee recognises that there is monetary policy space for future action. However, given the evolving growth-inflation dynamics, the MPC felt it appropriate to take a pause at this juncture," the RBI said in its fifth bi-monthly monetary policy for this fiscal.
Top gainers in the Sensex pack were TCS, Bharti Airtel, Infosys, Axis Bank, L&T, ITC, PowerGrid, HCL Tech and Tata Steel, ending up to 2.39 per cent.
Kotak Bank was the biggest loser in the Sensex pack, falling 3.71 per cent, followed by RIL, HDFC Bank, Bajaj Finance, PowerGrid, IndusInd Bank, Asian Paints, HDFC and ITC.
RBI's current Deputy Governor Urjit Patel got 3-year extension in January.
The RBI on Friday said it will give banks Rs 1 trillion through targeted long-term repo operations (TLTROs), of up to three-year maturity, to deploy in "investment-grade corporate bonds, commercial paper, and non-convertible debentures over and above the outstanding level of their investments in these bonds as of March 27, 2020."
The rising price of the precious metal has helped the central bank increase overall forex reserves despite currency reserves not rising, and sometimes even falling.
Das said banks have passed only 0.29 per cent in rate cuts to their borrowers as against 0.75 per cent cuts in interest rates by the Reserve Bank till June.
India's factory output climbed 22.4 per cent in March, benefiting from the base effect of the lockdown-marred month a year back as well as a turnaround in the manufacturing sector, while retail inflation slipped to a three-month low of 4.29 per cent in April. The high positive annual growth in the index of industrial production (IIP) in March 2021 came on back of a contraction of (-)0.9 per cent and (-)3.4 per cent in January and February 2021 respectively, according to the data released by the National Statistical Office (NSO) on Wednesday. This turnaround was led by recovery in the mining, manufacturing and electricity sectors.
The overarching talking point will be the reluctance on the part of private banks to loosen their purse strings and increase lending substantially, even as the central bank believes there is adequate liquidity within the system.
Major gainers in the Sensex pack were Wipro, Kotak Bank, Infosys, Maruti, Tata Motors, L&T, IndusInd Bank, Hero MotoCorp, M&M, SBI, ONGC, HDFC Bank and HUL, rising up to 3 per cent.
The government hopes the latest action will lead to banks also lowering the cost of borrowing for corporate and individual borrowers.
Banks have been reluctant to transmit the entire policy rate cut by RBI to borrowers.
'In the real economy, the scars of the pandemic will continue to define 2021.' 'It is still hard to tell the effect on unemployment, migrant workers, poverty, and the informal sector of the lockdown and of the pandemic,' observes Mihir S Sharma.
As he projected a grim outlook for the economy, RBI Governor said that amidst this encircling gloom, agriculture and allied activities have provided a beacon of hope on the back of an increase of 3.7 per cent in foodgrains production to a new record.
Although there is headroom for further monetary policy action, at this juncture it is important to keep our arsenal dry and use it judiciously: RBI's Das.
Three key babus will make room for a new set of officers to carry the baton of Budget programmes.
This is not her first stint in North Block or in leading a major economic ministry. She started Prime Minister Narendra Modi's first term as minister of state for finance, was made the commerce minister, and then became the defence minister.
Currency notes of lower denomination of Rs 100 and Rs 50 will continue to be the legal tender
Softening inflation, Das said would make available more policy space to the central bank to address risks to the growth going forward.
For the first time, the value of card and mobile payments of Rs 10.57 trillion was more than ATM withdrawals of Rs 9.12 trillion in Q4 of fiscal 2019-20. In the months of lockdown, the gap may have widened further, but cash could be back in vogue when the situation normalises.
Government hits back, tells rating agency to introspect on processes.
Central banking is a science, not an art, Tamal Bandyopadhyay tells RBI Governor Shaktikanta Das.
The board deliberated on the governance framework of the RBI and it was decided that the matter needs further examination
Private sector lenders have been communicating to their customers about their strong capital positions but it has not put depositors at ease.
While Governor Das was sanguine on government walking the fiscal prudence path--which was missed three out of the five budgets of the Modi government--Acharya pointed to the fiscal slippages as a worry.
Government may bring a new law on black money during the ongoing Parliament session.
Das favoured shifting the stance of monetary policy from neutral to accommodative to send a clear signal, indicating that more measures could be taken in the near future to boost growth.
As part of the long-standing ritual, the sweet dish is prepared in a large vessel and consumed by a large number of official and support staff who are required to stay in the North Block office till the presentation of the Budget, which is February 28 this year.
The appointment will be made by Prime Minister Narendra Modi in consultation with Finance Minister Arun Jaitley.
'Given the 50 per cent or thereabouts increase in borrowing that has been announced, it is a reasonable estimate to say that at this time, an increase of 1.7-1.8 per cent on the 3.5 per cent budgeted fiscal deficit target is being anticipated,' Chief Economic Adviser Krishnamurthy Subramanian said on Friday.
RBI said more monetary transmission to support growth continues to be critical.
The finance ministry on Friday informed a parliamentary committee that smuggling of fake currency has totally stopped post demonetisation and the tax department has seized Rs 515 crore in cash, including Rs 114 crore of new currency notes, up to January 10.
Armed with automatic information exchange pact with the US, government on Thursday asked persons holding undisclosed offshore assets to declare them before September 30 as it would be difficult to hide unaccounted assets in future.
It will be put up in the public domain.