Lockdown 2.0: Coronavirus-hit units get Rs 10,000 crore from banks

Ahead of finalising the package for industries hit by Covid-19, the Union finance ministry reviewed support extended by large public sector banks (PSBs), including via the emergency credit line, to affected firms.

 State Bank of India (SBI) and Bank of Baroda (BoB) have together sanctioned close to Rs 10,000 crore as immediate credit assistance to the affected units.

PSB executives said this was a regular review with top officials of large banks, including SBI. There was also discussion on working capital re-assessment.

Banks have built internal capacities for assisting companies, including micro, small & medium enterprises (MSMEs). Feedback from interactions is expected to act as an input for policies that are in works.

However, it is not clear when the package would be finalised, officials said. A SBI executive said the bank is giving these emergency loans to those in need. It does not involve elaborate scrutiny. Only thing is that borrowers have to establish the Covid impact.

Why foreign lenders are rushing to invest in Indian retail banking space

Current Affairs
Outsized returns in India, besting nearby moneylenders without precedent for 10 years, are encouraging banks, for example, Citigroup, Deutsche Bank and HSBC to put more in a market that has since quite a while ago held guarantee yet tended to under-convey.
Facilitating guidelines and a flood in internet banking are driving the change, with a few abroad loan specialists expanding venture plans for the nation to win prosperous customers from household rivals, senior investors told Reuters. Improved execution in India and its premise in the take-up of advanced retail banking administrations could likewise offer trust in other huge markets with potential far more noteworthy than the benefit so far conveyed, for example, China.
"With exchange banking going exceptionally solid and retail banking getting pace, a ton of outside banks internationally are currently concentrating on India and enlisting better execution," said Sanjoy Datta, Deloitte India money related administrations practice head. "It might represent a few difficulties as banks intend to extend more into the level two towns however generally speaking, remote banks in India will keep on developing as there are no unavoidable (industry-explicit) challenges," he stated, highlighting innovation as a key empowering agent.
Attracted by a huge economy and rising working class pay, in excess of three dozen outside loan specialists in India have been competing for a greater portion of the market for quite a long time - yet they represent only 6 percent of the financial resources.

Helping the most recent development spurt is administrative facilitating on the side of mechanical money related administrations. For example, the national bank in August permitted banks - under an "administrative sandbox" structure - to dispatch items and administrations, for example, advanced client record verifications and cash move...READ MORE

RBI faces calls to do more than just one rate cut amid economic slowdown

International News

India's central bank is poised to deliver its fourth successive quarter-point interest rate cut on Wednesday, amid calls from investors and the government for further easing as a slowdown gripping the economy becomes more pervasive.
The Reserve Bank of India will lower the benchmark repurchase rate by 25 basis points to 5.5 per cent, according to almost all of the 36 economists surveyed by Bloomberg. Swap markets are pricing in at least another 50 basis points of reductions before the end of 2019.
Finance Minister Nirmala Sitharaman has ratcheted up pressure on the six-member monetary policy committee for a "significant cut" to lift economic growth from a five-year low. Inflation that's stayed below the central bank's 4 per cent medium-term target for 11 months in a row and the Federal Reserve's first rate cut since the financial crisis allows room to retain the policy makers' easing bias.
A quarter-point cut will take the benchmark rate to the lowest since April 2010. With price pressures anchored, the central bank may have the leeway to keep rates lower for longer.
"We expect 75 basis points of additional rate cuts spread over August, the fourth quarter of 2019 and the first quarter of 2020, taking the repo rate to 5 per cent by March 2020," said Pranjul Bhandari, chief India economist at HSBC Holdings Plc in Mumbai. The headline inflation will stay below the RBI's medium-term target for the "foreseeable future" due to a lack of underlying price pressures across sectors, she said.
Data dependent

 Policy action will be data-dependent, RBI Governor Shaktikanta Das said in an interview last month, while suggesting that the MPC has already delivered 100 basis points worth of easing as...Read More

Bank credit up 14.5% to Rs 94.29 trn, deposits rise 9.63%: RBI data

Economy & Policy:

The pace of growth in bank credit, as well as deposits, has moderated on a fortnightly basis. While credit grew 14.5 per cent to Rs 94.29 trillion, deposits rose a tepid 9.63 per cent to Rs 121.22 trillion for the fortnight ending February 1, according to the latest Reserve Bank of India (RBI) data. In the fortnight ended January 18, deposits had increased by 9.69 per cent to Rs 119.86 trillion and credit grew 14.61 per cent to Rs 93.32 trillion, the RBI data showed.

The gap between pace of credit disbursal and deposits mobilisation is widening. This would maintain the pressure on deposits rates. According to bankers, these may not soften, even though the RBI reduced policy repo rate by 25 basis points, bankers said.
3
The RBI in its sixth monetary policy review said the aggregate bank credit and overall financial flows to the commercial sector continue to be strong but are yet to be broad-based
According to the RBI’s monthly bulletin released in February, the sectoral deployment of bank credit saw a qualitative shift with aggressive lending to the retail segment and in the form of personal loans.

 Credit to industry has gradually gained momentum in 2018-19 so far after a prolonged contraction.

 The pick-up in economic activity has boosted credit demand. However, their lending rates have remained in the shadow of the large pool of bad loans, the bulletin added.