India’s Worst Performing Banks on this All-Important Ratio

The December 2021 quarter was a good one for PSU banks. As the economy recovered, the credit growth of these banks improved and NPAs declined. India suffered among the biggest pandemic induced losses in the world in terms of output, lives and livelihoods, which may take years to recover.

• Amitabh Chaudhry, MD and CEO of Axis Bank, reckons that “capitalisation is much better, asset quality deterioration, adjusted even for regulatory forbearance, has surprised us in its moderation.
• Another way of putting it is that the repeal of RBI’s accommodative monetary policy stance is a variable in play now.
• We have to encourage the few sincere people we have at the top and defeat people who are thriving on hypocrisy.
• In the post-liberalization era, Yes Bank was one of the private banks of the new generation that started operations.
• Incidentally, the numbers are quite easy to remember, because, in the first quarter, the current account deficit was 2.2%.

So, for almost three years, the average inflation was 3.9% or close to 4%. After the pandemic, of course, the situation changed. Now, we have had one after the other major shocks, the COVID, then the war, monetary policy tightening, the current volatility in the financial markets, etc. The 4% has a certain meaning and let me add that our target of 4% plus/minus 2% is to declare it as a failure, if you exceed that, then only it’s a failure. I think that gives us sufficient flexibility in our monetary policy decision-making. We had to infuse a lot of liquidity, we had to also do a substantial reduction in policy rates.

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In a statement, the bank, as of 1st February 2020, will receive a maximum 10 per cent reduction in working capital. In the post-liberalization era, Yes Bank was one of the private banks of the new generation that started operations. A problem facing customers is that the worst banks do not meet the customer’s needs. To protect their interests, the RBI takes the lead. To tackle the problem, the RBI hands over the ailing bank’s responsibilities to a stronger bank.

The banks do their asset liability management and depending on their funds requirement and their ALM assessment, they take necessary action both on the credit side as well as the deposit side. The Government is a listed entity, holding 83.5% of the capital. Banking stocks are very closely linked to economy as both credit growth and margins are dependent on GDP growth and interest rates. Banks tend to have high non-performing assets when interest rates are high, and economy is underperforming and vice versa. The RBI Governor also commented on the collapse of the Silicon Valley Bank in the US, saying that our financial sector is stable. The ongoing US banking crisis drives home the importance of robust regulators, sustainable growth.

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The credit growth so far has been largely retail in India in this cycle. But my sense from our interaction with bankers is that they have started receiving proposals for wholesale credit. I do believe that given the importance which is being given by the policy authorities to let us say to renewables and several other sectors, there will be a big demand for credit from the domestic banking sector. A lot of credit was availed by our domestic corporate houses, particularly, during 2020 or 2021 from the overseas markets. They made their funds requirement by going to overseas markets at that time.

The bank has also reported a net interest margin of around 0.00% in 2020. The bank uses this to determine the amount of interest it earns and the amount of interest it pays on deposits. As a result of the scam, provision for bad loans increased by 94.6% to Rs 4,982 crore in the June quarter. However, following a special dispensation from the Reserve Bank of India , the bank is spreading the provision for the scam over four quarters.

This has led to a decline in the credit-deposit ratio and an elevation in the investment-deposit ratio, especially in incremental terms. Another way of putting it is worst banks in india that the repeal of RBI’s accommodative monetary policy stance is a variable in play now. My experience has also been very bad with the FEMA Compliance team of ICICI.

Is not very difficult to understand-most of these co-op. Banks are the handmaids of powerful politicians whose unaccounted millions are safely kept in benami accounts or the funds are used by them for their personal gain. Movement in India has been a disaster for the people for whom this was conceived and started, due to the all-pervading and permissive culture of corruption in an otherwise characterless nation. It will be worthwhile to see what security the bank is holding against the accepted NPAs of Rs500 crore, and what is the value of these securities.

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Went to the bank to return the kit and was told I need to fill another closing form which I did right away. Been 7 months since then and I st receive SMS saying my account balance is 0. Had gone to report it to bank and was told that the concerned staff is on holiday so I need to wait for another 3 weeks till she returns. Every investment, every credit, when it is given out, should be backed by appropriate risk assessment, Das stated, adding that the situation in the US needs a careful understanding by every bank. RBI Guv shed light on the fact that the Indian banking system continues to be resilient and stable.

A significant number of NPAs over time may indicate that the financial situation of the bank is at risk. They are of two types – gross NPAs and net NPAs. Gross NPAs refer to the total amount of debts a bank has while net NPAs refer to the total amount of stressed assets the bank has after accounting for provisions. The RBI report further added that the pandemic is a watershed moment and the ongoing structural changes catalysed by the pandemic can potentially alter the growth trajectory in the medium-term.

I am not ruling out that possibility, but it has improved considerably. The possibility of high for long is very much there, but these are the uncertainties, which one has to factor in. The bottom line is that, given the uncertainties, one has to be prepared for all eventualities. As the world know by anyhow we got attached with banking system in our day to day process, it regarding my one of best client,he is engaged in media production . In axis bank as we open the bank account it by default gives me two bank account.. 1st is axis bank current account used for our business day to day transactions & second is axis bank tax account in which our tax are transfered like TDS & Service tax..

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In the case of CBDC also, it is an instant settlement. The money, the currency, digital currency, and the e-rupee will flow from your wallet to the wallet of the merchant without the intermediation of the bank. So, it will become faster apart from issues of saving on logistics and cost of printing, etc. The impact of that decision will be felt seven months down the road. I think he’s the best judge, where he is sitting.

Imports have come down benefiting also from the decline in commodity prices. On the other hand, services exports have picked up and they are doing very well at the moment. So, we do expect the CAD of the current year to be eminently manageable so far as RBI is concerned and so far as the financing of the CAD is concerned, remittances are doing very well. The World Bank projects that India will receive US$100 billion of remittances this year, and the growth of the World Bank has been projected at 10 or 12%, but in the first half itself, the growth is almost 20%.

“The RBI has taken all necessary steps in risk management, doing stress tests, focusing on asset liability issues,” he highlighted. The bank hopes to release 50 bps of capital following the clean up of its balance sheet and unnecessary lines of credit given to customers who won’t be needing it. In FY17, private banks’ share in incremental credit was almost 100 per cent, as a dozen state-run banks which were under the RBI’s prompt corrective action framework had vacated their turf. The share of advances is down; that of investments is up, owing to banks’ risk aversion and limited profitable lending avenues. “The banking sector has coped well through stronger balance sheets and digital adoption. Roiled by unprecedented frauds and surging bad debt, the nation’s state-run banks have returned the least to investors this year.

You can connect with us on Twitter @elearnmarkets. However, the concern comes from the fact that the last day the RSI had breached the level of 30, had this reversal come from a level of say 31-35, more credibility would have been awarded to today’s move. What the management has spelled does sound like a new beginning for the bank, however, to build a new something which is already standing, it takes the process of creative destruction. “Reversing the provisions already made , is unlikely to be the route that NBFCs may follow due to accounting complexities,” he adds. “Most NBFCs have already absorbed the impact in their third-quarter FY22 results,” says Y S Chakravarti, MD and CEO of Shriram City Union Finance.

Delivering the 17th K P Hormis Commemorative Lecture, organised by Federal Bank, Das said that our external debt is manageable. Globally also the same trend is visible with the moderation in commodity, crude oil and several other prices. While inflation is moderating and while we recognise and state that the worst of inflation is behind us, there is no room for complacency. We will have to be extremely watchful and we have to be nimble in our actions.

The bank is expecting resolution of certain big NPA accounts through NCLT under the Insolvency and Bankruptcy Code and outside during the current fiscal year. It plans to continue to focus on NPA recovery and improve its asset quality during the year. Just like the above two PSU banks, Central Bank’s high NPA ratios are also due to NPAs in the corporate segment. Currently, only 44% of corporate loans are rated A or above while the rest 56% are rated BBB or below by credit rating agencies.

Use the other compensatory controls provided by the bank like setting the limits for demand draft and trusted third parties to zero, enabling high security, etc to minimize the risk. Please remember that the bank would never ask you to verify your account information through an e-mail. So, we can hold another session on cricket if you wish but having worked in the North Block, what is also important is that I know the corridors of North Block. I know which corridor takes a right bend where or a left bend where. So, I can close my eyes and enter into the Reserve Bank and reach my office. So, on a more serious note, I think you cannot classify it as a T20 or a limited over 50.

They have received no dividend for the past many years. Even if the bank is merged with another bank, shareholders are not going to get any money as had happened in the case of Global Trust Bank. There is also the curious case of Pune-based Rupee Co-operative Bank. There was a run on this bank sometime in 2002 and the board of the bank was dismissed, and it was put under an Administrator.