On 17 February, Sunil Mehta, a former country head of AIG in India, and T.C.A.
Listed Indian banks’ gross bad loans crossed Rs7 trillion in the December quarter. This is no nasty surprise. In fact, the December Financial Stability Report of the Reserve Bank of India (RBI) warned that gross bad loans of banks might rise further and public sector banks would be the worst hit.
Everybody is keen to know how India’s banks have been doing. Is the worst behind them in terms of rise in bad assets? Are they back on the profitability track? Their performance in the December quarter is critical for two key reasons. One, they have just come out of the seven-week note-exchange programme in which high-value notes accounting for 86% of the currency in circulation were invalidated in November-December.
The lack of action in the Reserve Bank of India’s (RBI) sixth bimonthly monetary policy on Wednesday is no surprise; an ounce of surprise is the change in the stance of the policy—from accommodative to neutral. Analysts of banks and fund houses who were pencilling in a 25 to 50 basis points rate cut between now and December 2017 will have to go back to the drawing board and work on their predictions. The status quo in this policy has not postponed the next rate cut, it has shelved it.
Ujjivan Small Finance Bank Ltd, the fifth such bank in India and the largest among the five in terms of their small loan portfolio, will make its formal debut on Monday after running a pilot programme in five of its microfinance branches in Bengaluru. Professor Muhammad Yunus, a microfinance pioneer and founder of the Grameen Bank in Bangladesh, will inaugurate the bank. Like Equitas Small Finance Bank Ltd, which started operations in September, Ujjivan too listed its shares ahead of the bank’s launch to comply with the regulatory norms.
The yield on the benchmark 10-year bond rose to 6.43% on Wednesday, from its previous close of 6.407%.