Major Challenging Factors in Banking Sector

"Challenges in Banking and Financial Services Sector and
it's impact on the Indian Economy".
Meeting Basel III compliance:

 Basel III is an international regulatory protocol that brought in a set of reforms
formulated to improve the regulation, supervision and risk management within the
banking sector.
 The Basel Committee on Banking Supervision published the first version of Basel III in
late 2009, giving banks approximately three years to satisfy all requirements.
 In order to address the credit crisis, banks are required to maintain proper leverage
ratios and meet certain minimum capital requirements.
Source: Investopedia: reviewed by James Chen updated 15 July 2019
 Basel III is part of the continuous effort to enhance the banking regulatory framework.
 It enhances points listed in the Basel I and Basel II documents, and touches upon majors
taken to improve the banking sector's ability to deal with financial stress, improve risk
management, and strengthen the banks' transparency.
Unrestricted
 Basel III stresses to improve greater resilience at the individual bank level in order to
reduce the risk of system-wide shocks.
A) Minimum Capital Requirements

 Basel III implemented tighter capital requirements in comparison to Basel I and Basel II.
Banks' regulatory capital is divided into Tier 1 and Tier 2, while Tier 1 is subdivided into
Common Equity Tier 1 and additional Tier 1 capital.
 The difference is important because security instruments included in Tier 1 capital have
the highest level of subordination.
 Common Equity Tier 1 capital includes equity instruments that have discretionary
dividends and no maturity, while additional Tier 1 capital comprises securities that are
subordinated to most subordinated debt, have no maturity, and their dividends can be
cancelled at any time.
 Tier 2 capital consists of unsecured subordinated debt with an original maturity of at
least five years.
 Basel III kept the guidelines for risk-weighted assets largely same as Basel II. Risk-
weighted assets represents a bank's assets weighted by coefficients of risk set forth by
Basel III.
 The higher the credit risk of an asset, the higher its risk weight. Basel III uses credit
ratings of certain assets to establish their risk coefficients.
 In comparison to Basel II, Basel III strengthened regulatory capital ratios, which are
computed as a percent of risk-weighted assets.
 In particular, Basel III increased minimum Common Equity Tier 1 capital from 4% to
4.5%, and minimum Tier 1 capital from 4% to 6%. The overall regulatory capital was left
unchanged at 8%.
Countercyclical Measures
 Basel III brought in new requirements with respect to regulatory capital for large banks
to cushion against cyclical changes on their balance sheets.
 During credit expansion, banks have to set aside additional capital, while during the
credit contraction, capital requirements can be loosened.
 The new guidelines also brought in the bucketing method, in which banks are grouped
according to their size, complexity and importance to the overall economy.
Systematically important banks are subject to higher capital requirements.
Unrestricted
Leverage and Liquidity Measures
Additionally, Basel III brought in leverage and liquidity requirements to safeguard against
excessive borrowings and ensure that banks have sufficient liquidity during financial stress.
In particular, the leverage ratio, computed as Tier 1 capital divided by the total of on and off-
balance assets less intangible assets, was capped at 3%.
Problems: (Source: Live mint, 19 Jun, 2019)
 The Reserve Bank of India was not able to fully meet tougher requirements set by the
Basel III norms, according to a report by the Basel Committee on Bank Supervision
(BCBS).
 The semi-annual report brought out by the BCBS, a committee under the Bank For
International Settlements, analyzed the adoption status of Basel III standards by 30
global systemically important banks (G-Sibs) as of end-May 2019.
 This committee of banking supervisory authorities targeted to enhance understanding
of key supervisory issues and also to increase the quality of banking supervision
worldwide.The committee reports that India’s central bank is yet to publish the
securitization framework and rules on total loss-absorbing capacity (TLAC)
requirements.
 Globally, the norms on securitization exposures held in the banking book had come into
effect on 1 January, 2018.
 The RBI was not able to meet the deadline for meeting the TLAC requirement, which
ensures that G-Sibs have adequate loss absorbing and recapitalization capacity so that
critical functions can be continued without taxpayers’ funds or financial stability being
put at risk.
 These included instruments that can be either written down or converted into equity,
like capital instruments and long-term unsecured debt. The TLAC constitutes 16% to
20% of a group's consolidated risk-weighted assets.
 The RBI has not yet released out with draft regulations on revised Pillar 3 disclosure
requirements, which took effect from end-2016.
 Pillar 3 disclosures targets at ensuring market discipline through disclosures in
prescribed format, while Pillar1 targets on capital adequacy and Pillar 2 targets at the
supervisory review process.
 According to the report, India’s G-sibs are in the process of implementing rules on
interest rate risk in the banking book (IRRBB).
 These regulations refer to the current or prospective risk to the bank’s capital and
earnings arising from adverse movements in interest rates that affect the bank’s book
positions. The central bank had issued draft guidelines in February 2017 and is yet to
come out with final guidelines.
Unrestricted
B) Poor credit portfolio: (source: smartinvestor.in Sai Manish/ 29 Nov 19)
 In India, 42 nos. scheduled commercial banks (SCBs) collectively wrote off Rs 2.12
trillion worth of loans in 2018-19, according to figures given by the finance ministry in
Parliament.
 Not only was this 42 per cent higher than the Rs 1.5 trillion written off the previous
year, but also about 20 per cent of all their non-performing assets (NPAs).
 According to Reserve Bank of India (RBI) guidelines, "non-performing loans,
including, those in respect of which full provisioning has been made on completion of
four years, are removed from the balance sheet of the bank concerned by way of
write-off."
 Since 2014-15, when the Narendra Modi-led government first came to power,
India’s banks have written off Rs 5.7 trillion worth of bad loans.
 So far as the country’s 21 public-sector banks (PSBs) are concerned, the amount
of bad loans taken off their balance sheets has increased progressively over the
years. In 2018-19, these banks wrote off Rs 1.9 trillion worth of bad loans — about
90 per cent of the total for all SCBs, and four times their own write-offs in 2014-15.
 For India’s SCBs, an increase in write-offs has occurred concurrently with a rise in
NPAs. Bad loans on the books of all banks have tripled in four years — from Rs 3.2
trillion in 2014-15 to Rs 9.4 trillion in 2018-19.
 The massive rise in write-offs by India’s PSBs and some crisis-hit private lenders
assumes more significance in view of a higher rate of bad-loan recoveries under the
country’s new insolvency resolution process, which came into force through a
legislation in 2016.
 According to an RBI report, in 2018-19, banks were able to recover Rs 74,500 crore
from companies under the resolution process — at a recovery rate of 43 per cent.
 While more banks are now using the corporate insolvency resolution route, the sheer
scale of bad loans and write-offs suggests that banks would have to take a heavy
cut.
 Even if the loan recovery rate under insolvency resolution were to improve to 50 per
cent in coming years, India’s banks would still never be able to recover Rs 5 trillion
from various errant corporate borrowers.
 Debt service is becoming riskier with deteriorating economy, though banks are still
taking the risk of debt concentration, as India's top 20 borrowers have managed to
get about Rs 16 of every Rs 100 loan amount of the Indian banking system.
 RBI data obtained by India Today through RTI reveals that the tiny number of
borrowers owed Rs 14 lakh crore exposure in the financial year 2019 - about 16 per
cent of the total loan exposure of the Indian banking system.
Unrestricted
 Loan exposure to the top 20 borrowers has spiked about 24 per cent from FY 2018
to FY 2019. At the same time, India's total outstanding loan portfolio has grown only
12 per cent.
Source: Indiatoday.in, Dipu Rai, Delhi, November 28, 2019
 The total outstanding to all borrowers has grown from Rs 76.88 lakh crore in FY
2018 to Rs 86.33 lakh crore in FY 2019.
 On the other hand, these 20 borrowers' outstanding has jumped from Rs 10.94 lakh
crore to Rs 13.55 lakh crore in the same period.
 These borrowers have shared almost half the total industry loan, including Micro,
Small & Medium Enterprises (MSME).
 Moreover, banks have funded thrice more money to them than MSME.
Unrestricted
Unrestricted
 India's average interest rate has been 9 per cent in FY 2019, while the GDP growth
rate has been 6.6 per cent, and it may further slump to 5 per cent in the first quarter
of FY 2020. Debt service paid to the banks is eating into the economy as the gap
between the interest rate and GDP is widening.
Unrestricted
Source: Economictimes.Indiatimes.in (Saloni Shukla, Nov 06, 2019)
 Commercial banks, cooperative banks (like Punjab & Maharashtra Cooperative

Bank) and shadow banks (like IL&FS) are showing the level of stress being faced by
Indian financial institutions, but lessons are yet to be learnt and debt concentration is
worrying.
 Jan Dhan accounts and the Mudra scheme have managed to increase financial
inclusion at the individual level, gains that can’t be denied by the staunchest critics.
 But a credit crisis and question marks over debt-service cover have restricted fund
access to a majority of Indian businesses below the top tier, despite abundant
liquidity with high-street lenders and that has raised the weighted average cost of
capital for innumerable businesses now battling with the cost of working capital debt
running into high teens.
 The problem appears to affect small and medium businesses across industries. A
mid-sized SME in the business of chemical exports approached one of India’s
largest lenders for a working capital loan. But it had no idea that this will increase the
interest outgo to 15.5% from 14.2%, with a warning that the facilities could be
withdrawn within three months.
 While the SME was lucky to even secure a loan, albeit at much higher rates, several
of its other counterparts had their requests turned down as the state-owned bank
has decided to withdraw the banking facilities for lower-rated businesses due to
higher perceived risks.
Unrestricted
REJECTION RISK :
 Risk aversion is the new guiding principle in Indian banking today, reflecting the
decline in credit growth numbers.
 Loan growth remained lukewarm in the fortnight ended October 11, signaling that
the loan melas that kicked off this month are yet to translate into significant
disbursals.
 “A lot of contraction in credit is related to the fact that mutual funds have withdrawn,
non-banking lenders have withdrawn, there is a huge contraction because some
have burnt their fingers.
 The problem is that most corporates are also not borrowing as much as they did in
the past. Credit increased 8.8% compared with 14.4% in the same period a year
ago.
 The latest monetary policy report by the Reserve Bank of India (RBI) also revealed
that overall financial flows to the commercial sector have declined sharply, by around
88%, in the first six months of FY20.
 According to the latest RBI data, the flow of funds from banks and non-banks to the
commercial sector has been Rs 90,995 crore in 2019-20 so far (April to mid-
September) against Rs 7,36,087 crore in the same period last year.
 “On the funding side, lenders have been selective. Even though many non-banking
financial institutions have reduced their shorter-tenure borrowings and increased on
balance sheet liquidity, interest from institutional investors in the debt capital market
has remained lukewarm.
 “Bank credit growth continues to languish, with similar trends observed in the NBFC
space. There has been a fall in consumption demand, especially in-home loans, auto
and service segments; and decline in industry credit, primarily on account of risk
aversion on the part of banks to lend to MSMEs.
Unrestricted
MSMEs IN THE Vortex :
 The Modi government, in its second innings, has been pushing credit to small
businesses, but most banks have seen a spike in bad loans in that segment.
 CIBIL data showed that in just three months, the total on balance sheet commercial
lending exposure to this segment declined to Rs 63.8 lakh crore in June from Rs
65.5 lakh crore in March.
 According to Capital Line data, 1,127 companies out of over 4,500 listed companies
have ratings that range between BB, C and D.
Unrestricted
 Poor monetary policy transmission has also affected businesses. RBI data showed
that the response of banks to the cumulative reduction in the policy repo rate by 110
bps during the easing cycle of monetary policy starting from February 2019 has been
muted so far.
 While the weighted average lending rate (WALR) on fresh rupee loans decreased by
only 29 bps (February-August 2019), WALR on outstanding rupee loans, in contrast,
increased by 7 bps over the same period. The inadequate transmission essentially
reflects slow adjustment in bank term deposit rates.
TRUST DOESN’T COME EASY :
 CRISIL data showed that the nonbanking crisis has worsened the problem. The
wholesale loan book of non-banks —comprising nonbanking financial companies
(NBFCs) and housing finance companies (HFCs) — de-grew further by 3-5% in the
first half of fiscal 2020, following a de-growth of 2% in the second half of fiscal 2019.
 This comes on the back of a 32% compound annual growth rate (CAGR) between
fiscals 2016 and 2018; and a 11% growth in the first half of fiscal 2019.
 With disbursements sluggish in the first half of this fiscal, prospects for the current
year are subdued.
 In the meantime, some more companies have defaulted. First, it started with liquidity.
Now, we see asset quality issues. The moment I suspect that, I want to run away
from you. Because I start believing your equity is wiped out.
 And the worries are not unfounded. According to an analysis by Fitch Ratings, Indian
banks would face a capital shortfall of about $50 billion in the event of a systemic
crisis in non-banking financial companies.
Unrestricted
 As per a stress test that assumed 30% of banks’ NBFC exposure could go bad, such
an occurrence would reverse the recent progress that banks have made in reducing
their NPL ratios.
 In fresh estimates, Fitch said that the banking system’s gross NPL ratio would rise to
11.6% by FYE21 from 9.3% at FYE19 compared withits baseline expectation of a
decline to 8.2%.
SAFETY CATCH :
 The banking system is sloshing about with liquidity that is in excess of Rs 2.3 lakh
crore, clearly indicating two things:
 One, there is a demand side problem and banks want to toe the line to avoid past
mistakes. With slow credit offtake, banks have once again begun parking money in
safe haven investments. RBI data showed that banks held excess SLR of 6.9% of
net demand and time liabilities on August 30 this year compared with 6.3% at the
end of March.
 Banks are also busy chasing assets that are rated BBB- and above. But in this race,
what they forget is that 50-60% of SME assets are below BB - that is non-investment
grade.
Unrestricted
Twin sheet Problem:
Source: ClearIAS.com Article by: Rahul Sharma, Aug 25, 2019

Twin Balance Sheet Problem (TBS) deals with two balance sheet problems. One
with Indian companies and the other with Indian Banks.
Thus, TBS is two two-fold problem for Indian economy which deals with:
Overleveraged companies – Debt accumulation on companies is very high and
thus they are unable to pay interest payments on loans. Note: 40% of corporate
debt is owed by companies who are not earning enough to pay back their interest
payments. In technical terms, this means that they have an interest coverage ratio
less than 1.
Bad-loan-encumbered-banks – Non Performing Assets (NPA) of the banks is 9%
for the total banking system of India. It is as high as 12.1% for Public Sector Banks.
As companies fail to pay back principal or interest, banks are also in trouble.
Origin of Twin Balance Sheet Problem in India
Unrestricted
 Higher cost, lower revenues, greater financial costs-all squeezed corporate

cash flow leading to NPAs in the banking sector.
Peculiarities of India’s Twin Balance Sheet Problem (TBS):
 In India, there have been no bank runs, no stress in the interbank market,
no need for any liquidity support and GDP growing at a good pace since the
TBS problem first emerged in 2010. Yet the problem has reached to this
scale where it threatens the stability of the entire banking system.
 The reason for this is that major NPAs are concentrated in Public Sector
Banks which have the full backing of the government.
 It is worrisome that India Inc has stopped, for all practical purposes,
investing into the creation of new capacities
 The TBS postulated that a surge in borrowing leads to over-leverage which
in turn leads to debt-servicing problems.
Unrestricted
 Without similarly cherry-picking only distressed companies we can see that
the debt-equity ratio of all non-finance companies in the Prowess database
(over 20,000 companies) in 2013-14 and 2014-15 had reached a decadal
peak of 1.16 times.
 But, a gearing of this order is not alarming. A decade earlier, the ratio was
regularly more than 1.16 times. So, the increase to 1.16 times was not
exceptional and so does not lend itself to the argument that the corporate
sector was over-leveraged.
 But, more importantly, the ratio was down to less than 1 in 2017-18.
Preliminary estimates suggest that it could have remained under 1 even in
2018-19. Evidently, the corporate sector as a whole is not over-leveraged. It
can borrow and grow but, it doesn’t.
Financial stress:
 An interest cover less than 1 is a clear sign of financial stress because this
indicates an inability to even pay interest from its pre-interest and pre-tax
profits. An interest cover less than 1.5 is also stressful because it leaves
little buffer after paying interest and principal.
 An interest cover between 1.5 times and 2i times is workable but, ideally it
should be over 2 times.
 In 2014-15 and 2015-16, interest cover stood at 1.9 times. So, it wasn’t too
bad even when the Economic Survey was painting the sector red. By 2017-
18, interest cover had climbed up to 2.2 times.
 Evidently, the corporate sector as a whole does not have difficulty in
servicing its debt. Of course, it is always possible to find companies that are
stressed.
 But, the corporate sector as a whole is not stressed on servicing its debt
obligations. Yet, the corporate sector as a whole, has walked away from
investments.
 The worst years of the corporate sector in terms of its inability to repay
loans were between 1997-98 and 2003-04.
 During this period even companies were barely able to service their debt
obligations. The best period begins in 2004-05 and ends in 2011-12.
Unrestricted
 From 2012-13, we see stress building up. This was not anywhere as bad as
it was during the late 1990s and over the turn of the century.
 More importantly, the stress started showing signs of receding in 2016-17
when the Economic Survey was painting a gory picture of the same.
 In 2017-18, interest cover stress had clearly receded leaving all the top four
Deciles back in good health. But, in 2017-18, the corporate sector refused
to invest into new capacities.
 Evidently, the problem with the corporate sector is not in its balance sheet.
 The flip side of the TBS is the health of the banks. Following the Asset
Quality Review mandated by the RBI, the reported non-performing assets
of banks soared.
 As a result, the capital adequacy ratio of commercial banks dipped to 13.3
per cent by the end of March 2016. It was 13.9 per cent as of March 2013.
 But, thanks to some write-offs and some re-capitalization of public sector
banks, capital adequacy ratio had climbed to 14.3 per cent as of March
2019. This is the highest CAR recorded in at least 20 years.
 Evidently again, banks are well-stocked and the problem is not in their
balance sheet either.
 In fact, the problem regarding the current investments slowdown was
never in the balance sheet of the corporate sector or the banks.
 It was never a Twin Balance Sheet problem. Compared to the mid-to-late
1990s when Indian corporate sector saw its earlier growth compression,
both balance sheets in the recent years were reasonably strong on the
aggregate.
 Corporate balance sheets allowed them to borrow and bank balance sheets
allowed them to lend. But, both did not.
What is the solution to the Twin Balance Sheet Problem?
 India has till now pursued a decentralized approach where individual banks
have taken decisions on its own to resolve NPAs.
 This approach has not resolved the problem and time have now come to
create a centralized agency called Public Sector Asset Rehabilitation
Agency (PARA).
Unrestricted
Working of PARA:
 PARA would purchase loans from banks and then work them by different
ways like converting debt to equity and selling the stakes in the auction.
 After taking off the loans from Public Sector Banks, the government would
recapitalize them.
 Similarly, once the financial viability of the over-indebted enterprises is
restored, they will be able to focus on their operations, rather than their
finances and will be able to consider new investments.
Conclusion
 Twin Balance Sheet Problem (TBS) is a major problem that Indian economy
is facing today.
 The past mechanisms of resolving this problem in the form of decentralized
approach have failed.
 There is no point of delaying this problem because the delay is very costly
for the economy as impaired banks are scaling back their credit while the
stressed companies are cutting their investments.
 The time has come to adopt the strategy that East Asia adopted during
their crises period.
 The centralized agency in the form of PARA would allow debt problems to
be worked out quickly. The time has come for India to consider the same
approach.
Unrestricted
Source:economic-research.bnpaparibas.com//conjoncture April 2017
Unrestricted
Unrestricted
Demonetization: (Source: April 12, 2019, Jim Chappelow)
 In 2016, the Indian government decided to demonetize the 500- and 1000-
rupee notes, the two biggest denominations in its currency system; these
notes accounted for 86 percent of the country’s circulating cash.
 With little warning, India's Prime Minister Narendra Modi announced to the
citizenry on Nov. 8, 2016 that those notes were worthless, effective
immediately – and they had until the end of the year to deposit or
exchange them for newly introduced 2000 rupee and 500 rupee bills.
 Chaos ensued in the cash-dependent economy (some 78 percent of all
Indian customer transactions are in cash), as long, snaking lines formed
outside ATMs and banks, which had to shut down for a day.
 The new rupee notes have different specifications, including size and
thickness, requiring re-calibration of ATMs: only 60 percent of the country’s
200,000 ATMs were operational. Even those dispensing bills of lower
denominations faced shortages. The government’s restriction on daily
withdrawal amounts added to the misery, though a waiver on transaction
fees did help a bit.
 Small businesses and households struggled to find cash and reports of daily
wage workers not receiving their dues surfaced. The rupee fell sharply
against the dollar.
 The government’s goal (and rationale for the abrupt announcement) was to
combat India's thriving underground economy on several fronts: eradicate
counterfeit currency, fight tax evasion (only 1 percent of the population
pays taxes), eliminate black money gotten from money laundering and
terrorist-financing activities, and to promote a cashless economy
 Individuals and entities with huge sums of black money gotten from parallel
cash systems were forced to take their large-denomination notes to a bank,
which was by law required to acquire tax information on them.
 If the owner could not provide proof of making any tax payments on the
cash, a penalty of 200 percent of the owed amount was imposed.
Unrestricted
Source: Investopedia, Aug 29 2018, Deborah D’souza
 In a new report that will possibly leave the Indian government red-faced,
the country's central bank has revealed that 99.30% of the currency
demonetized in November 2016 is back in circulation.
 According to the Reserve Bank of India's annual report for 2017-18 released
on Wednesday, almost all of the Rs. 500 and Rs. 1000 notes demonetized,
which made up 86% of currency at that point, were exchanged for new
currency or deposited into banks.
 While the government had early indicated it expected Rs. 4-5 trillion in
"black money" would not return to the system, RBI has said that of the
Rs.15.4 trillion in demonetized notes, Rs. 15.3 trillion had been returned
and only Rs. 107 billion purged.
 The central aim of the dramatic move to demonetize notes was to catch
citizens stashing money not declared for tax purposes or obtained
illegally by surprise.
 The government was hoping to put a dent in the country's underground
economy. However, almost all of the money was returned to the banking
system, revealing that the whole exercise, which derailed the
economy, caused months of cash shortages, hurt the unorganized sector,
more than doubled the amount RBI spends on printing new notes and even
resulted in numerous deaths, failed to meet its main objective.
 “None of the original objectives have been met. Some of the other
objectives laid out fighting terrorism and corruption, even that has clearly
not been met,” “Instead, what it did was give a body blow to the informal
economic activity and I don’t think that the country has still fully recovered
from it.”
 However, income tax collections rose following demonetization, which the
government insists is a significant win. It recently pointed out
that 209,000 non-filers who each deposited over Rs. 1 million in old bank
notes paid Rs 64 billion in self-assessment tax after receiving notices from
income tax officials.
Unrestricted
 Demonetization brought in a lump sum of cash amounts into the bank. Post
demonetization, the financial institutions had higher deposits.
 The influences of demonetization in the banking sector into four categories:
increase in deposits, fall in the cost of funds, demand for government bonds,
and low volume in lending.
 Banks were able to increase their deposits with higher inflows. The banks in the
public sector put excessive funds into government bonds. Through the return
on investment from the government bonds, the banks added 15-20% in
increased earnings.
Dip in growth of loans:

{Source: https://digitalcommons.georgiasouthern.edu/honors-theses/404
Patel Jaymin, “demonetization in India: An Analysis of instant decision”(2019)}
 Table 3 shows that the rural part of India was most affected with the amount of
loans processed. Despite having a more formal urban economy, the urban
areas of India also showed a -45.53% decrease in processed loans in 2017.
 A decrease in the processing of loans indicated a lower revenue for the
financial institutions. Instead, the banks invested the inflow of currency into the
bond market.
 The opportunity cost for the financial institutions was the extra amount of profits
the interest of loans would have generated compared to bond yields.
 For example, Table 3 indicates that rural India experienced a period of very small
loan growth of 2.5% in the second half of 2017, which represented a reduction of
loans by 80.60% compared to the second half of 2016.
21
Unrestricted
Source: https://digitalcommons.georgiasouthern.edu/honors-theses/404
Unemployment:
 Employment in India is broken down into two categories: blue collar and
white collar.
 Blue collar refers to jobs that must deal with physical labor while white collar
refers to corporate style jobs. In most cases, cash would be the most
common form of payment to blue collar workers.
 According to IAS Score (2019), close to 1.5 million workers were left
unemployed after demonetization.
 Figure 8 shows how many workers were left unemployed in each industry.
 After the end of 2016 and the start of 2017, the unemployment rate increased. It
went from 3.49% to 3.52% from 2015 to 2017. Prior to 2015, the unemployment
rate was 3.41%.
 The unemployment rate can be contributed to the lower rates of investments
occurring in the market.
 Labor force participation rate (LPR) was lower than forecasted in October of 2017.
In October 2017, the Centre for Monitoring Indian Economy predicted the LPR to
be 49.67%.
23
Unrestricted
 Instead the demonetization movement was announced, and the rate grew to
46.28%. The rate hit a low of 45.8 % in November and December of 2016.
 Figure 8 shows that the road construction sector had to lay off close to 35% of
workers due to demonetization. The manufacturing sector also had to lay off
approximately 29%.
Unrestricted
Inflation:
In 2013, the inflation rate in India was around 11% but decreased until the end of 2017,
where it hit a record low.
 Figure 10 demonstrates the decrease in inflation rates from 2013 to 2015, when
it stabilized at around 5%.
 However, after the demonetization in 2016, inflation decreased to a record low of
3.33%.
 This additional drop in inflation might be explained by consumers reluctant to
make non-essential purchases due to the demonetization.
 A decrease in the inflation rate, as seen in Figure 10,indicates the supply was
greater than the demand in the economy.
 After 2017, though, the inflation rate went back to the 5% rate, which might
suggest that the impact of the demonetization on inflation was rather short-lived.
Unrestricted

Major Challenging Factors in Banking Sector

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Major Challenging Factors in Banking Sector

Загружено:

Авторское право:

Доступные форматы

"Challenges in Banking and Financial Services Sector and

it's impact on the Indian Economy".

Meeting Basel III compliance:

Source: Investopedia: reviewed by James Chen updated 15 July 2019

A) Minimum Capital Requirements

B) Poor credit portfolio: (source: smartinvestor.in Sai Manish/ 29 Nov 19)

Source: Indiatoday.in, Dipu Rai, Delhi, November 28, 2019

Source: Indiatoday.in, Dipu Rai, Delhi, November 28, 2019

Source: Indiatoday.in, Dipu Rai, Delhi, November 28, 2019

Source: Indiatoday.in, Dipu Rai, Delhi, November 28, 2019

Source: Indiatoday.in, Dipu Rai, Delhi, November 28, 2019

 Commercial banks, cooperative banks (like Punjab & Maharashtra Cooperative

Source: Economictimes.Indiatimes.in (Saloni Shukla, Nov 06, 2019)

Source: Economictimes.Indiatimes.in (Saloni Shukla, Nov 06, 2019)

MSMEs IN THE Vortex :

Source: Economictimes.Indiatimes.in (Saloni Shukla, Nov 06, 2019)

TRUST DOESN’T COME EASY :

Source: Economictimes.Indiatimes.in (Saloni Shukla, Nov 06, 2019)

Source: Economictimes.Indiatimes.in (Saloni Shukla, Nov 06, 2019)

Source: ClearIAS.com Article by: Rahul Sharma, Aug 25, 2019

 Higher cost, lower revenues, greater financial costs-all squeezed corporate

Source:economic-research.bnpaparibas.com//conjoncture April 2017

Source:economic-research.bnpaparibas.com//conjoncture April 2017

Source:economic-research.bnpaparibas.com//conjoncture April 2017

Dip in growth of loans:

common form of payment to blue collar workers.

unemployed after demonetization.

Вам также может понравиться