1. WEEKLY FINANCIAL SNIPPETS – 15/10/2016
1. TOTAL BANK DEPOSITS CROSS Rs 100 LAKH CRORE FOR THE FIRST TIME: India’s
banking system reported total deposit of Rs 100.00 lakh crores for the first time ever
in September 2016. This is as per the data released by RBI. With demand deposits
crossing Rs 10 lakh crores and time deposits crossing Rs 90 lakh crores. The month
of September saw the highest ever monthly rise of 5.32 lakh crores. Although 100
lakh crores is a big milestone, historical data reveal that the deposit growth has
slowed down considerably in the last five years. While banks’ deposit grew at a CAGR
of 12.88% in the previous five years, it had grown at a CAGR of 19.9% in the previous
five years.
2. PSBs LOSSES MAY HAMPER ABILITY TO PAY INTEREST ON BONDS: As per CRISIL
Rating’s report, a sharp decline in profitability and mounting losses of some of the
Public Sector Banks could wipe out their revenue reserves and hamper their ability
to pay interest on bonds issued to meet Basel III norms. While the government has
committed capital infusion to PSBs, the coupon on AT1 bonds can only be serviced
through current year’s profit or from revenue reserves and hence any capital
infusion by government alone cannot improve the banks’ ability to service coupon
( interest) on the bonds.
3. GOVERNEMENT PLANNING MERGER OF TWO BIG PSU BANKS AFTER DEBT CLEAN-
UP: Government of India is planning and may merge two big banks in the coming
fiscal once the clean-up of bad asserts is completed. Consolidation of India’s public
sector banks would represent a final step in rebuilding a strong financial system
capable of underwriting credit growth and more job creating investment.
4. FIRST HALF FINANCIAL STATEMENTS (H1) TO BE SUBMITTED BY BANKS TO RBI BY
NOVEMBER 30TH: The Reserve Bank of India has asked banks to submit the first- cut
reporting of their financial statements for the first half of the fiscal ending
September 30 with regard to Indian Accounting Standards by November 30th. This
will help RBI to ascertain the difficulties faced by these banks as part of the transition
to the International Financial Reporting Standards from April 2018.
5. RBI CHIEF WARNS OF RISKS FROM BREXIT AND U.S. ELECTIONS: Reserve Bank of
India Governor Mr. Urjit Patel has warned India and fellow BRICS countries( Brazil,
Russia, India, China and South Africa) to be prepared to confront potential “political
risk” events such as Britain’s exit from European Union and U.S. Elections. Mr. Patel
said that India has already moved in this regard to improve its defences, through
measurable progress in price stability, fiscal rectitude and sustainable current
accounts. He further added that government initiatives such as ‘’Make in India”
intended to turn it into a manufacturing hub.
Compiled by www.maacapitalsolutions.com