The report, however, has as its baseline a current account deficit of 2.1 percent of GDP in the second half of FY19, but that deficit increases to 3.4 percent of GDP in the first half of FY20, in the baseline scenario. What’s more, this is expected to happen despite a projected improvement in the merchandise exports to GDP ratio from 12.5 percent in the second half of FY19 to 12.7 percent in the first half of FY20. The report doesn’t say why the RBI foresees such a sharp rise in the current account deficit. Perhaps they fear a rise in crude oil prices or more imports as economic growth improves and investment demand rises. … [Read more...] about Quick Take | Decoding FSR fine print: RBI unlikely to change policy rate till first half of FY20
In April 2019, Bank of Baroda in a first three-way merger exercise amalgamated Vijaya Bank and Dena Bank with itself. The SBI had merged five of its associate banks - State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore and State Bank of Hyderabad and also Bharatiya Mahila Bank with itself effective April 2017. … [Read more...] about Efforts of banks under PCA frameworks are being monitored: RBI Governor
Even more interesting is the fact that the Output Prices sub-index came in at 49, which indicates prices have fallen from the previous month, the first time this has happened since July 2017. One reason for low output prices was because input cost inflation moderated to a 34-month low in December. … [Read more...] about 100-word take: Weak December Manufacturing PMI another reason for RBI to cut rates
The RBI report points out that the proportion of capital dedicated to operational risk in the PCA banks is a mere 18.9% of the total operational risk capital in the banking sector. This is much lower than its share of frauds, which is 36.5%. It’s a powerful argument against relaxing the restrictions on lending for these banks. As the RBI report says with remarkable understatement: ‘A more judicious alignment of realised operational risk with allocated capital, specifically with regards to PCA-PSBs, is desirable.’ … [Read more...] about Quick Take | With so many frauds in PCA banks, why take the risk of allowing them to lend?
Growth of the SME book, which has a typical ticket size of Rs 5 crore and below, has been so fast it was only Rs 48,000 crore in March 2015, that jumped to Rs 72,000 crore in March 2017 and crossed the Rs 1 lakh-crore-mark in March 2019 to sniff at Rs 1.5 lakh crore by December 2019. … [Read more...] about HDFC Bank SME book doubles to Rs 1.48 lakh cr in under 3 years