ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Bank Recapitalisation Bonds for Government-owned Banks

Weak balance sheets of public sector banks warrant infusion of equity capital by the government. Recapitalisation is liquidity neutral for the government when financed via an issue of government securities that a recapitalised bank is mandated to purchase. Bank balance sheets at the time of...

Small Finance Banks

Small finance banks (SFBs) are niche banks serving the unserved and underserved population at affordable cost with a view to furthering digital financial inclusion in India. The main objectives of the SFBs are promoting an institutional mechanism to mobilise savings from rural and semi-urban areas...

Finance, Banking, Money, in That Order

The “Banking: Theory & Policy” class of 2020–21 was a sounding board. The comments of an anonymous reviewer added value to an earlier draft. The usual caveats apply.

Evolving Contours of Monetary Policy

Monetary policy has emerged as an important tool of economic policy both in developed and developing economies. The monetary and financial system is far more complex today than it has been in the past. Financial intermediation has reached a high level of sophistication, which has itself become a source of concern. The impact of monetary policy action can be transmitted through a variety of channels, some of which though recognised in the past, have become more important. While the traditional issues such as the objectives of monetary policy and the possible trade-off among them remain relevant, they need to be related to the far-reaching changes in the institutional environment at home and abroad. The changing objectives of monetary policy, newly evolving instruments of monetary control and the transmission mechanism and issues related to autonomy in the pursuit of monetary policy are examined.

Financial Fragility in ‘Mature’ Markets

With rising non-financial corporate debt and evidence of elevated borrowing levels among non-bank financial companies, the fragility resulting from excess leverage has returned to haunt developed country financial markets. The fact that the collapse of a little-known family office firm like...

Non-interest Income and Stability of Commercial Banks

The impact of the share of non-interest income on the risk of banks in India for the period 1993–2018 is examined, employing coefficients of variation, and linear and quantile regression techniques. The higher share of non-interest income leads to diversification benefits and reduces the risk of banks. The share of non-interest income has fallen and more banks have become unstable in the last decade. For the nationalised and foreign banks, the increase in the proportion of non-interest income has led to greater stability. However, for some of the private banks, this relation is not linear.

Why Corporate Houses Should Not be Allowed to Promote Banks: A Reading List

The new proposal by an RBI Internal Working Group to allow large corporate/industrial houses to float banks poses various risks for the banking sector.

Financial Inclusion and Digital India: A Critical Assessment

Financial inclusion is one of the cornerstones of a developing economy. Launched in 2015, Digital India has been regarded as a significant intervention to bring the unbanked population, who had been kept out of the mainstream economy, into the formal financial net. While there has been an improvement in digital transactions across the country, issues still remain of last-mile connectivity of banks and other financial institutions, dormant accounts, among others.

Can Payments Banks Succeed?

Recently, the Reserve Bank of India has begun licensing a new kind of retail bank, called payments banks, for the hitherto financially excluded. The regulator’s argument that technological innovation will allow payments banks to achieve a seemingly impossible trilemma of financial inclusion while still being competitive and profitable is examined. The article concludes that amelioration of this trilemma will require the regulatory orientation to fundamentally change, and for the state to provide a kind of public good to all payments banks.

The Namesake: Human Costs of Digital Identities

This article presents a case study from Jharkhand documenting a particularly distressing case of two women of the same name who have a bank account in the same branch.

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