The latest Financial Stability Report for March ’18 released by RBI shows that interconnectedness of Indian Banking industry has come down considerably over last year. That is important to note since the rapid spread of contagion during financial crisis in 2008 was primarily due to the fact that the financial institutions in US had become highly … Continue reading Banking Sector Interconnectedness in India..
The amalgamation of Bank of Baroda, Vijaya Bank and Dena Bank announced yesterday comes more than a year after the last successful merger in the PSB space. It clubs two PSBs having less than 2% market share with a mid-sized bank to create the country’s third largest bank. However, there are still around ten PSBs … Continue reading Analysing Amalgamation of BoB, Vijaya Bank & Dena Bank..
State Bank of India (SBI) declared loss of almost Rs 5,000 crore for the quarter ended June 18. This is despite earning operating profit of nearly Rs 12,000 crore. So, what is happening to its financials and how is it tackling it.?? That and a lot more.. SBI, the largest bank in the country with over … Continue reading State Bank of India – Realigning Strategy…
Another important factor leading to NPA is changes in ground realities. While a project is conceived factoring in a particular scenario, it doesn’t materialize or changes drastically by the time the project is commissioned. One glaring example of this is huge investment in natural gas based power plants, specially closer to Andhra Pradesh coast. This … Continue reading Understanding Bank NPAs.. (Part II)
Bank’s NPA which remains at over Rs 10 lakh crore for the quarter ended June 18 continues to haunt the sector. The problem is even more severe for Public Sector Banks which account for over 80% of these NPAs. So, how bad is the problem and what are the core factors leading to this mess? … Continue reading Understanding Banks NPAs.. (Part I)
The passage of Ordinance related to NPAs has renewed the sense of urgency to clear up the mess with Gross NPA of the banking sector crossing Rs 6 lakh crore mark. More worryingly, there is no sign yet of a trend reversal. An analysis to understand where this NPA is coming from.. It is important to understand … Continue reading NPAs – Sectoral Analysis…
The promulgation of the Ordinance yesterday for resolution of Non Performing Assets (NPAs) is another measure to tackle the crisis gripping the banking sector. Yet, the ordinance could be another dead ball and nothing that one can hope would work wonders due to lack of market participants. A look at the implication of the ordinance… An Ordinance is … Continue reading Ordinance on NPAs – The Fight Continues…
Belying the expectations of a rate cut, the monetary policy committee (MPC) has not only decided to keep the rates unchanged in its meeting today but more importantly, has shifted its stance from “accommodative” to “neutral’. This is “to assess the transitory effects of demonetization on inflation and the output gap”. The shift marks a significant … Continue reading Monetary Policy – From "Accommodative" to "Neutral" stance..
After growing at over 18% CAGR during FY08-12, bank credit growth came down sharply to 11% during FY12-16 and may fall to single digit in FY17. Although the decline is largely due to economic slowdown, a significant part is also due to shifting priorities with increase in NPAs of specific sectors. A look at the … Continue reading Banks Loan Composition – An Overview..
Demonetisation has brought focus on currency in circulation and different types of money supply. Even though currency in circulation has come down, other forms of money supply do not show similar decrease. How is that so and what are the characteristics and significance of different types of money supply. A look at the same.. The first … Continue reading Money Supply – Understanding the Different Forms..