Mobility paves Samsung’s silver path
The Korean giant’s early bet on mobile phones helped it hit the $10-bn mark in India, but in its 25th year it ...
RBI Governor Shaktikanta Das - Bloomberg
While the banking sector has shown signs of stabilisation, the performance of public sector banks (PSBs) needs to improve and they need efforts to build buffers against disproportionate operational risk losses, according to Reserve Bank of India Governor Shaktikanta Das.
In his foreword to the latest Financial Stability Report (FSR), the Governor said the private sector banking space also needs to focus on aspects of corporate governance.
“Financial sector regulators under the aegis of the Financial Stability and Development Council (FSDC) are striving to buttress the trust in the financial system.
“Having said that, let me re-emphasise the importance of good corporate governance across the board, which to my mind is the most significant factor that can lift the efficiency of our economy to its full potential,” the Governor said.
Das noted that as the world continues to grapple with uncertainties of various hues, higher expectations from monetary policy as a panacea for all economic problems also persist.
Extraordinary monetary policy stimulus has driven global interest rates lower to ‘never-seen-before’ levels in some Advanced Economies and a significant pool of these resources is also chasing emerging market assets with consequent impact on the asset prices and corporate leverage, even as emerging market growth and corporate earnings outlook remains weak, he added.
Das underscored that: “The challenge is to ensure transmission of monetary policy impulses to the advantage of real economies and not to aid build-up of froth in financial markets. We need to be mindful of the ‘cobra effect’.”
When an attempted solution makes the problem worse, it is called the ‘cobra effect’.
As per the FSR, macro-stress tests for credit risk show that under the baseline scenario, scheduled commercial banks’ (SCBs) gross non-performing assets (GNPA) ratio may increase from 9.3 per cent in September 2019 to 9.9 per cent by September 2020. This is primarily due to change in the macroeconomic scenario, marginal increase in slippages and the denominator effect of declining credit growth.
The report said India’s financial system remains stable notwithstanding weakening domestic growth.
Pointing out that non-banking finance companies (NBFCs) and housing finance companies (HFCs) are the largest and the second largest borrowers of funds from the financial system, with a substantial part of this funding coming from banks, the report cautioned that failure of any NBFC or HFC will act as a solvency shock to its lenders.
The solvency losses caused by these shocks can further spread by contagion either due to direct linkages among the lenders or due to an information contagion, it added.
Referring to the banking stability indicator, the report said this shows that there was an improvement in the banking sector’s soundness, profitability, efficiency and liquidity in September 2019 as compared to March 2019.
The Korean giant’s early bet on mobile phones helped it hit the $10-bn mark in India, but in its 25th year it ...
Antrix should adopt a different tactic than merely fighting over jurisdiction: Experts
Invest in relationships, enterprise, behaviour, effort and learning
From different types of osmoses to new membranes, researchers have come up with ways of drawing water
What filters should you apply when mining for under-the-radar small-cap stocks? Read on to find more
There’s no reason to bail out of your fund as long as it’s matching the category average
Amid choppiness, the benchmark indices slipped marginally; approach the week with caution
SBI Cards (₹1,032.7): Witnesses fresh breakoutBetween September and December last year, the stock of SBI Cards ...
That weekend came the news that Champa’s elder daughter was engaged, the proof arriving in the form of Jaimini ...
“Amma,” Divya yelled from the bathroom. “There’s something in my teeth.”Balakrishnan and Veena froze and ...
What makes the new crop of young Indian cricketers such game-changing winners? Over and above their talent, ...
For their dead, Parsis practise a 3,000-year-old system where corpses are excarnated in the Tower of Silence, ...
Digital is becoming dominant media, but are companies and their ad agencies transforming fast enough to make a ...
Slow Network, promoted by journalist-lyricist Neelesh Misra, pushes rural products and experiences
How marketers can use the traditional exchange of festive wishes meaningfully
For Fortune, a brand celebrating its 20th anniversary, it was a rude shock to become the butt of social media ...
Three years after its inception, compliance with GST procedures remains a headache for exporters, job workers ...
Corporate social responsibility (CSR) initiatives of companies are altering the prospects for wooden toys of ...
Aequs Aerospace to create space for large-scale manufacture of toys at Koppal
And it has every reason to smile. Covid-19 has triggered a consumer shift towards branded products as ...
Please Email the Editor