Latest news with #SCBs
Hans India
09-07-2025
- Business
- Hans India
Indian banks need enhanced assessment of interest rate impact: Report
New Delhi: The change in repo rate is the most reliable predictor among key banking metrics like advances, deposits, and Net Interest Income (NII) that affect lending activities, a report said on Wednesday, adding that banks need enhanced assessment of the interest rate impact. However, it takes 12 to 24 months for the full effects of rate changes to materialise in banking performance as transmission is neither immediate nor uniform, showed a Boston Consulting Group (BCG) study. "Such policy rates are often increased to cool down an overheated economy, to rein in inflation," said Deep Narayan Mukherjee, Partner and Director, BCG. "While rates act as enablers, the actual expansion of credit hinges on borrower sentiment and lenders' risk appetite," Mukherjee added. According to the study, the repo rate is the most accurate predictor across all metrics, even though rate changes affect all Scheduled Commercial Banks (SCBs). A 50 bps increase in the repo rate leads to a 1.11 per cent rise in Net Interest Income (NII) across SCBs, with PSBs showing a sharper 1.45 per cent gain, it noted. Compared to private banks, public sector banks (PSBs) were more responsive to repo rate changes. PSB advances increased by 1.4 per cent in response to a 50 basis point hike, while private sector players — especially larger ones — reacted more subtly. Lower interest rates don't always translate into more lending, despite what many people think. Rates serve as facilitators, but borrower sentiment and lenders' risk tolerance ultimately determine whether credit is expanded, the study said. For example, despite rising interest rates, there was strong credit growth from 2022 to 2023. Similarly, it was discovered that advances across SCBs increased by 1.16 per cent with a 50 basis point increase in the repo rate and decreased by 1.25 per cent with a similar cut. 'The era of one-way, predictable interest rate cycles is likely over. With geopolitical disruptions and domestic market shifts reshaping the landscape, Indian banks can no longer afford to rely on conventional planning models. Banks need to more explicitly embed Interest rate sensitivity in business projections than has been the case for at least some of them till now,' the report mentioned.
Business Standard
02-07-2025
- Business
- Business Standard
Insurance companies second largest net providers of funds to financial system as at end-Mar-25
According to a latest update from the Reserve Bank of India, with gross receivables at Rs 11.12 lakh crore against gross payables at Rs 0.91 lakh crore, insurance companies were the second largest net providers of funds to the financial system as at end-March 2025. SCBs (primarily PVBs) were the largest recipients of their funds, followed by NBFCs and HFCs. Insurance companies provided funds mostly through LT debt and equity, accounting for 90 per cent of receivables, with limited exposure to ST instruments. As of December 2024, and the previous three quarters, the aggregate solvency ratio for insurance companies remained above the prescribed threshold. The solvency ratio of the life insurance companies remained at 204 per cent, while non-life insurance companies maintained a solvency ratio of 166 per cent as of December 2024.
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Business Standard
01-07-2025
- Business
- Business Standard
Indian scheduled commercial banks' gross NPA ratio at 15-year low
Private sector banks' gross NPA ratio was stable at 2.8 per cent while foreign banks saw a decline to 0.9 per cent from 1.2 per cent Subrata Panda Listen to This Article The Indian scheduled commercial banks' (SCBs') asset quality continues to improve, with gross and net non-performing asset (NPA) ratios at a multi-year low, according to the Reserve Bank of India's (RBI's) latest Financial Stability report. While overall gross NPAs were lower at 2.3 per cent (of gross advances) as of March 31, 2025, compared to 2.8 per cent a year ago, public-sector banks saw a sharp reduction from 3.7 per cent in March 2024 to 2.8 per cent in March 2025. Private-sector banks' gross NPA ratio was stable at 2.8 per cent, while foreign banks declined to 0.9 per cent
Business Standard
01-07-2025
- Business
- Business Standard
Weighted average lending rate stood at 9.2% in May
RBI stated that the weighted average lending rate (WALR) on fresh rupee loans of SCBs declined to 9.20 per cent in May 2025 from 9.26 per cent in April 2025. The WALR on outstanding rupee loans of SCBs dropped marginally to 9.69 per cent in May 2025 from 9.70 per cent in April 2025. 1-Year median Marginal Cost of Funds based Lending Rate (MCLR) of SCBs moderated to 8.90 per cent in June 2025 from 8.95 per cent in May 2025. The share of External Benchmark based Lending Rate (EBLR) linked loans in total outstanding floating rate rupee loans of SCBs was 61.6 per cent at end-March 2025 (60.6 per cent at end-December 2024), while that of MCLR linked loans was 34.9 per cent (35.9 per cent at end-December 2024). The weighted average domestic term deposit rate (WADTDR) on fresh rupee term deposits of SCBs stood at 6.11 per cent in May 2025 as compared to 6.34 per cent in April 2025. The weighted average domestic term deposit rate (WADTDR) on outstanding rupee term deposits of SCBs was 7.07 per cent in May 2025 (7.10 per cent in April 2025).
India Gazette
30-06-2025
- Business
- India Gazette
Indian economy remains a key driver of global growth amidst global challenges: RBI report
New Delhi [India], June 30 (ANI): Despite an uncertain and challenging global economic backdrop, the Indian economy remains a key driver of global growth -- underpinned by sound macroeconomic fundamentals and prudent macroeconomic policies, RBI said in its latest Financial Stability Report. Elevated economic and trade policy uncertainties are testing the resilience of the global economy and the financial system. 'Financial markets remain volatile, especially core government bond markets, driven by shifting policy and geopolitical environment. Alongside, existing vulnerabilities such as soaring public debt levels and elevated asset valuations have the potential to amplify fresh shocks,' the highlights of the RBI report read. The domestic financial system, according to the RBI, is exhibiting resilience fortified by healthy balance sheets of banks and non-banks. Financial conditions have eased, supported by accommodative monetary policy and low volatility in financial markets. The strength of the corporate balance sheets also lends support to overall macroeconomic stability, the RBI noted. 'The soundness and resilience of scheduled commercial banks (SCBs) are bolstered by robust capital buffers, multi-decadal low non-performing loans ratio and strong earnings,' RBI said in its report. In the banking sector, results of macro stress tests affirm that most SCBs have adequate capital buffers relative to the regulatory minimum even under adverse stress scenarios. 'Stress tests also validate the resilience of mutual funds and clearing corporations,' it supplemented. Non-banking financial companies (NBFCs) remain healthy with sizable capital buffers, robust earnings and improving asset quality. As was widely expected, the Indian economy grew by 6.5 per cent in real terms in the recently concluded financial year 2024-25, official data showed recently. The Reserve Bank of India had projected 6.5 per cent GDP growth for the fiscal year 2024-25. In 2023-24, India's GDP grew by an impressive 9.2 per cent, continuing to be the fastest-growing major economy. According to official data, the economy grew 8.7 per cent and 7.2 percent, respectively, in 2021-22 and 2022-23. To realise the vision of 'Viksit Bharat', a developed nation dream by 2047, India will need to achieve a growth rate of around 8 per cent at constant prices, on average, for about a decade or two, the Economic Survey document for 2024-25 tabled on January 31 asserted. (ANI)
