Bond market has been moving up since the budget, much to the displeasure of RBI. Yield on 10-year government bond has crossed 6.2% from 5.9% just before the budget. Not only India, even globally, bond markets have been behaving much the same despite all the assurance being given by the central banks. As a side-effect … Continue reading Curious Case of Bond Market Movement!
Financial system is a network of institutions such as banks, NBFCs, HFCs, Insurance companies, MFs etc. connected as borrowers or lenders. The interconnectedness helps them channelize savings into investments and enable economic growth. However, this can also act as channel for risk transmission in case of failure as seen in the recent episodes of IL&FS, … Continue reading Interconnectedness of Financial Sector – An Overview
NBFI comprises of Non-banking finance companies (NBFCs), All India financial institutions (AIFIs) and primary dealers (PDs). NBFCs are the second most group after SCBs specializing in meeting the financing needs of large range of areas such as vehicle loans, personal loans, infrastructure financing etc. The segment came into prominence in 2018 after the default by IL&FS, … Continue reading Financial Sector in India – An Overview (Part II)
Financial sector in India appears to have weathered the storm arising out of Covid-19 reasonably well. Although the crisis is not over yet, but, possibly, the worst is over. But what all constitutes Indian financial sector, what is their size and their relative positioning. And how have each constituent fared in the recent past. Here … Continue reading Financial Sector in India – An Overview (Part I)
RBI’s balance sheet for the year 2019-20 (July’19-June’20) has expanded by massive 30%, the highest in possibly over a decade. However, it hasn’t happened because it made huge profits, which, anyway, it has to pass-on to central government as dividend. And it has also not happened because it has printed more currency notes, whose share … Continue reading Analyzing RBI’s Balance Sheet
RBI’s draft proposal for the amalgamation of Lakshmi Vilas Bank Ltd (LVB) brings down the curtains on the 94-years old bank, struggling to survive over last 2-3 years. Even though the bank is rather small, failure of any bank sends strong negative signal and therefore, calls for RBI’s action in case market forces fail to … Continue reading Lakshmi Vilas Bank (LVB) – Analysing the Failure And the Rescue Plan
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.
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 … Continue reading Revising History – Banks’ Nationalization