Nationalization of 14 banks fifty years ago has been termed as the most defining economic event by RBI; even bigger than the reforms of 1991. The event, although, had political developments of that time as trigger, did lead to complete re-orientation of Indian Banking. Here is a look at the background and the changes that the decision achieved. Continue reading Revising History – Banks’ Nationalization
Among the plethora of challenges, the economy faces, amidst the pandemic, is the sharp decline in credit growth. RBI has reduced the benchmark repo rate by 2.5% to manage this, and has also been ‘nudging’ banks to increase lending which, it feels, could spur growth. However, its efforts haven’t really had much impact as borrowers … Continue reading Bank Credit Growth – Analyzing the Reversal
Covid-19 is having an unprecedented impact on financials of corporate sector putting a serious question mark on survival of many of them. Other than the cash required to pay salaries etc, companies need to generate sufficient cash to pay interest and loan installments. As per Kamath Panel report, as much as Rs 37.7 lakh crore … Continue reading Corporate Debt Restructuring – Understanding the Issues Involved
Covid-19 pandemic has further added to the woes of corporate and financial sector, already reeling under the impact of subdued economic conditions, NPAs overhang, NFBC crisis etc. Yet, the sectors have shown considerable degree of resilience so far, aided by regulatory and government efforts. However, the real credit for the same goes to their efforts … Continue reading Corporate & Financial Sector – Changing Dynamics.
The suspension of the board of Yes Bank and appointment of an administrator was almost like a bolt from the blue; but in retrospect, had been coming for quite some time now. The bank had seen a series of defaults in its advances and was unable to raise funds to make up for this. Here … Continue reading Yes Bank – Diagnosis of A Failure
Banking sector’s NPA (Non-Performing Assets) has become a cause of concern again with RBI’s observation that the same may increase in next 12 months. RBI’s latest Financial Stability Report (FSR) attributes the same to change in economic environment leading to fresh slippage and declining credit growth. Here is a look at the aggregate NPA level, … Continue reading Banks’ NPA – Taking Stock..
Corporate bond market in India is going through a challenging time as a result of the defaults over last one year or so. While efforts of government and regulators had provided the necessary nudge, these developments have dented the confidence of the newer participants and fence sitters. More worryingly, it has affected the credibility of … Continue reading Corporate Bond Market – Tracking the Developments
The NBFC crisis seems to be posing a unique challenge. While NBFCs are complaining of severe scarcity of liquidity, banks’ lending figures reveal another story. As per RBI data, banks’ borrowings of NBFC has gone up by 21% y-o-y till Sept’19. In fact, their total balance sheet has grown by 13% to Rs 32.6 lakh … Continue reading NBFCs – A Liquidity Crisis or An Insolvency Crisis??
NBFI comprises of All India financial institutions (AIFIs), Non-banking finance companies (NBFCs) and primary dealers (PDs). There are four AIFIs – National Bank for Agriculture and Rural Development (NABARD), Small Industries Development Bank of India (SIDBI), National Housing Bank (NHB) and Export Import Bank of India (EXIM Bank). AIFIs were established decades ago to meet long … Continue reading Financial Sector in India – An Overview (Part II)
The financial sector in India is going through a unique period with all the three major segments – SCBs, NBFCs and Co-operative banks going through a crisis. The crisis has led to serious brain storming among the policy makers to reduce regulatory arbitrage and improve regulatory oversight. While heavy involvement of government is cited as … Continue reading Financial Sector in India – An Overview (Part I)