Bankers Trust:

25 basis point rate cut likely, but all eyes on RBI’s language

25 basis point rate cut likely, but all eyes on RBI’s language

Speaking on the sidelines of an economics conclave in New Delhi over a weekend in July, Reserve Bank of India (RBI) deputy governor Viral Acharya said the cleaning up of the books of banks was the Indian central bank’s number one priority ahead of cutting interest rates. This is in sync with his view reflected in the minutes of the June meeting of the Monetary Policy Committee (MPC) where Acharya justified the tolerance of a slightly higher rate of interest as aimed at ensuring that banks “do not find relatively low the hurdle rate for evergreening of bad loans”. Evergreening typically refers to the practice of giving a fresh loan or a short-term line of credit to a borrower to service the interest of an existing long-term loan.

Bankers Trust:

The whys and hows of bank consolidation in India

The whys and hows of bank consolidation in India

Maidavolu Narasimham, 80, the 13th governor of the Reserve Bank of India (RBI), must be a happy man in Hyderabad today. What he had ideated in a seminal report on banking reforms more than two decades ago may finally see the light of day. At least, recent media reports suggest that.

Bankers Trust:

It’s official, Indian banks’ health will worsen

It’s official, Indian banks’ health will worsen

Those who have been hoping that the worst is behind the Indian banking industry are a disappointed lot. Going by the Reserve Bank of India’s (RBI) June Financial Stability Report, the risks to the banking industry’s stability have worsened. It warns that the banking system’s gross bad loan ratio will rise to 10.