Bankers Trust:

Dear FM, please attach strings to bank recapitalisation

Dear FM, please attach strings to bank recapitalisation

While announcing the big fat recapitalisation of banks, any government, anywhere in the world, is bound to face the predicament of Larry Fortensky. On his wedding night at Michael Jackson’s Neverland Valley Ranch at Santa Barbara County, California, in October 1991, Fortensky—Elizabeth Taylor’s seventh husband from her eighth marriage (she had remarried Richard Burton)—knew what exactly he was expected to do, but his challenge was how he could do it differently from the past husbands of much-married Taylor. How could India’s finance minister Arun Jaitley be different from his predecessors who have, since 1994, continuously thrown lifelines to many failing banks, using tax payers’ money.

Bankers Trust:

The untold story behind IndusInd Bank-Bharat Financial merger

The untold story behind IndusInd Bank-Bharat Financial merger

Seven years ago, on 11 October 2010, the Andhra Pradesh government notified an ordinance that almost killed SKS Microfinance Ltd (SKS), now known as Bharat Financial Inclusion Ltd (BFIL). On the same date in 2017, the boards of BFIL and IndusInd Bank Ltd (IndusInd) approved the merger of the two entities, giving yet another lease of life to India’s largest micro lender, albeit in a different form. Following the Rs15,486 crore all-stock deal, for every 1,000 BFIL shares held, an investor in IndusInd will get 639 shares of the bank.

Bankers Trust:

How borrowers are exploited by banks

How borrowers are exploited by banks

An internal study group of the Reserve Bank of India (RBI), chaired by Janak Raj, principal adviser, monetary policy department, has lambasted commercial banks for their non-transparency in fixing loan rates and graphically dissected how most Indian banks exploit borrowers. The mandate for the study group, set up in July, was to look at the various aspects of the current marginal cost of funds based lending rate (MCLR) system and explore a new benchmark for banks’ loan rate that could improve monetary transmission. Since we have a bank-led financial system, monetary transmission is a must to make the RBI’s policy rate effective; but achieving this continues to be a challenge for a string of reasons, including banks’ unwillingness to pass on the benefits of low interest rates to customers and their proclivity to neglect existing customers and woo new customers with lower-interest rate loans.

Bankers Trust:

RBI governor Urjit Patel: We’ve started seeing the upturn in economic growth

RBI governor Urjit Patel: We’ve started seeing the upturn in economic growth

Mumbai: In his first interview to any newspaper since he took over as Reserve Bank of India (RBI) governor in September 2016, Urjit Patel discussed economic growth, inflation, liquidity and the one-year journey of the monetary policy committee (MPC). The October monetary policy marked the first anniversary of the MPC, the new architecture in this space that was put in place after the Indian central bank got the mandate for flexible inflation targeting. The MPC has six members—three each from RBI and the academic world—who decide the direction of the country’s monetary policy, and is a move away from the previous architecture that made the RBI governor the ultimate authority on this.

Bankers Trust:

RBI governor Urjit Patel: Visible signs of growth in second half

RBI governor Urjit Patel: Visible signs of growth in second half

Mumbai: In an interview two days after the October monetary policy that left the policy rate unchanged, raised the year-end inflation projection marginally and pared the growth projection for fiscal 2018, Reserve Bank of India (RBI) governor Urjit Patel said there are visible signs of upturn and economic growth is likely to exceed 7% in the last two quarters of the year as projected in last week’s monetary policy report. “We have started seeing the upturn. The Nikkei India Services PMI Business Activity Index rose more than 3 percentage points in September over August; the core sector IIP (index of industrial production) saw a 4.

Bankers Trust:

The next rate cut is uncertain

The next rate cut is uncertain

The Reserve Bank of India (RBI) has kept its policy rate unchanged at 6% and the stance of the October monetary policy continues to remain neutral, but the rise in the Indian central bank’s inflation projection for the second half of fiscal year 2018, marginally though (from 4%-4.5% to 4.2%-4.