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

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A Surge in State Spending

State budgets continue to support the macroeconomic recovery even as state fi nances deteriorate.

The ‘What,’ ‘Why,’ and ‘How’ of a Widening Current Account Deficit

The reason for the increase in the current account deficit during first quarter of fiscal year 2022–23 is analysed. One reason for the widening of CAD has to do with India’s growing dependence on fossil fuels. There is also an element of lack of price competitiveness that is hurting exports. India is exporting low-valued technology-intensive goods whereas importing high-valued technology-advanced goods. The Government of India and the Reserve Bank of India are taking adequate measures to control the widening trade deficit. While some of these measures are yielding results in reducing CAD, external factors such as geopolitical tensions and the United States Federal Reserve System’s move of quantitative tightening are making CAD difficult to control.

India’s Fintech Industry and the G20 Summit

The Group of Twenty (G20) mantle passed onto India in December 2022 will give us a chance to not only host it but also make good use of the platform to showcase our rich cultural heritage and progress. There will be more than 200 meetings to be held in 50 cities in India.

An Investigation into the Selected Non-banking Financial Companies in India

The non-banking financial companies play a critical part in credit intermediation in India, with an active participation in credit lending to the segments that are largely left out by the formal banking channels. These include micro, small and medium enterprises, agriculture sector, and other unbanked sectors. Hence, they play a noteworthy role in the last-mile delivery of financial services and overall financial inclusion. Against the backdrop of the recent liquidity crisis, the financial health of selected 15 large NBFCs and the capital requirement regulations towards the sector are examined.

Spiralling Prices

It is a clear case of the government doing too little too late.

Asset Quality in Banks: Looking Far beyond Bad Banks

Startling rise in toxic assets of banks by March 2018 following the asset quality review of the Reserve Bank of India in 2015 heightened concerns. The fear of further deterioration of asset quality due to COVID-19-induced stress culminated into the historic step to form of National Asset Reconstruction Company Ltd –bad bank. When the loan recovery ecosystem is gradually strengthened with the enactment of the Insolvency and Bankruptcy Code, 2016, formation of bad banks can only be a temporary measure. With the improved credit appraisal, monitoring and debt resolution mechanism, banks should be capable to enforce recovery of loans and manage asset quality without the perpetual help of external institutions. The urgency is for banks to improve people and system competency to source quality credit, monitor it and recover it in time as part of normal banking operations. Bad banks cannot be a panacea against the systemic flaws in credit administration.

Price Risk of Central Government Securities in India

The study examines the determinants of price risk of the central government securities in India using their daily trading data comprising of 81,384 observations during the period 2011 to 2020.

Development Banks and the Changing Contour of Industrial Credit in India

The gradual evolution of industrial credit in India in the last three decades is examined against the backdrop of significant structural change in ownership and regulation in the Indian banking sector. The impact of institutional changes in the Indian banking sector during the post-liberalisation phase, especially in the form of the gradual winding up of development financial institutions, on the institutional credit flow to industry is analysed. There is a significant impact of the changing ownership structure of banks on the sectoral allocation of credit. Based on the analysis of sectoral credit flow from the commercial banks and specialised term-lending institutions in India over the last three decades, the need for creating a professional talent pool within the commercial banks for term-lending as well as lending to small entrepreneurs is underscored.

 

Cryptos, CBDC, Privatisation: Notebandi and Then Some

Misconceptions about money, like those during notebandi, define ideas on cryptocurrency and banking.

 

Is There a Bubble in the Indian Stock Market?

The recent surge in stock prices in India sparked off a debate on a possible bubble in the Indian stock market. The attempt here is to detect and date stamp bubbles present, if any, in the Indian stock market using a recursive econometric technique. This technique can help identify bubbles as they emerge, not just after they have exploded. This study does not indicate any explosive price behaviour in the Indian stock market. Thereby, the presence of any bubbles during the study period is not detected. The sharp decline and the subsequent recovery of the stock prices during the past 15 months was most probably an overreaction to the pandemic.

 

RBI’s Efforts towards ‘Pandexit’ Go beyond Policy Measures

In a proactive move, the Reserve Bank of India rescued the economy with its innovative—blended conventional and unconventional—monetary policy measures. Low-interest rates, aligning targeted liquidity, and granting moratorium coupled with forbearance to enable banks to restructure loans, mandated the Kamath panel to work out modalities to restructure corporate sector loans. After affirming stability and orderliness of the financial sector throughout the crisis period, it rightly signalled descent towards normalisation paving for pandexit manoeuvring the tool of variable reverse repo rate.

Banking Sector Resilient in the Face of Pandemic

Contrary to several gloomy forecasts, the Indian banking sector has been surprisingly resilient in the face of the pandemic. This is because corporates, which account more than half the loans, are in better shape and banks are well-capitalised. This bodes well for loan growth and bank performance post the pandemic.

 

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