NPAs – Sectoral Analysis…

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…
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Ordinance on NPAs – The Fight Continues…

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…
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Monetary Policy – From "Accommodative" to "Neutral" stance..

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..
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Banking Sector Interconnectedness in India…

The interconnectedness of banking and financial sector is not widely understood or discussed, yet a high risk issue. The rapid spread of contagion during financial crisis in 2008 was primarily due to the fact the global financial market has become highly interconnected and the distress in initial few entities led to their failure in meeting … Continue reading Banking Sector Interconnectedness in India…
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Banks Loan Composition – An Overview..

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..
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Money Supply – Understanding the Different Forms..

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..
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India’s Financial Sector.. (Part II)

NBFI comprises of All India financial institutions (AIFIs), Non-banking finance companies (NBFCs) and primary dealers (PDs). AIFI, currently only four in operations, largely provide long term sector specific financing. NBFCs specialize in meeting the financing needs of niche areas such as hire/purchase, commercial vehicles etc. NBFCs are categorized into two types – deposit-taking NBFCs (NBFCs-D), which are allowed … Continue reading India’s Financial Sector.. (Part II)
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India's Financial Sector – Understanding the structure.. (Part I)

The role of financial sector in the development of any economy is undebatable. This is even more critical in socialistic economies like India where sector functions with multiple objectives including financial inclusion, that being the reason for nationalisation of banks in 1970s. However, the structure of the sector has become complex over last few decades … Continue reading India's Financial Sector – Understanding the structure.. (Part I)
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Corporate & Financial Sector Performance – RBI Report..

Corporate sector have improved its financial position substantially during first half of 2016-17 as per the Financial Stability Report published by RBI last week. However, the impact of this on bank NPAs is still not visible. Gross NPAs of the banks has increased during the last six months and may take some more time before … Continue reading Corporate & Financial Sector Performance – RBI Report..
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Demonetisation – Absorbing the Excess Liquidity…

The decision to raise the limit for issue of bonds under MSS (Market Stabilization Scheme) is a prudent move and brings this innovative scheme in focus again. The arrangement also shifts the burden of holding cash from the Banks and RBI on to the government and would help stabilise the money market. A look at the scheme … Continue reading Demonetisation – Absorbing the Excess Liquidity…
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