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Foreign investors have withdrawn nearly Rs 20,000 crore from Indian stock markets in just five trading days (November 4–8), continuing a trend of large-scale selling that began last month. Experts say investors are now moving their money to China, largely due to the high valuations presently prevailing in Indian markets. In early November, FPIs have offloaded as much as Rs 19,994 crore in Indian markets. The month prior, i.e., October, was one of the worst months in terms of foreign outflows, with FPIs making a net withdrawal of Rs 94,017 crore. Before this, Indian markets faced such a situation during the pandemic, when FPIs withdrew Rs 61,973 crore from equities in March 2020. <h2>Why Are Investors Leaving? </h2>According to Himanshu Srivastava of Morningstar Investment Research India, two main factors are driving this exodus. First is China's renewed appeal due to lower stock valuations and new economic stimulus measures. In a bid to nudge the domestic economy and bail state governments, China recently approved a 10-trillion yuan (US $1.4 trillion) package. Per reports, approximately 60% of this stimulus focuses on allowing local governments to refinance the mountain of debt on them. Srivastava explains foreign investors are also flocking to US dollar and Treasury yields, which have appreciated significantly in the recent past, leading FPIs to anticipate a stronger US economy going ahead. Moreover, high valuations in Indian markets are discouraging foreign investors from putting more money in the economy. As a result, over the past week, the selling pressure eroded Rs 74,563 crore in market value for Reliance Industries, while Bharti Airtel and ICICI Bank lost Rs 26,274 crore and Rs 22,254 crore, respectively. The combined market valuation of six of the top 10 most-valued firms dipped by Rs 1,55,721.12 crore last week. <h2> Silver linings</h2>Despite the ongoing outflux of funds since last month, November also saw unprecedented applications of about 40–50 new FPI registrations, which are eyeing to enter the Indian market. This was due to markets SEBIs recent relaxation to NRIs, permitting them to participate up to 100% and announcing measures for ease of entry and operations in India. On the other hand, FPIs invested Rs 599 crore in the debt general limit and Rs 2,896 crore in the debt voluntary retention route (VRR) during the period under review. So far this year, FPIs have invested Rs 1.06 lakh crore in the debt market. <li class="whitespace-normal break-words"></li>Going ahead, investors will be looking for certain macroeconomic cues, which include corporate earnings reports, India's inflation (CPI) and industrial production (IIP) data on November 12, the US inflation report on November 13, and wholesale price index (WPI) data on November 14.

FPIs withdraw nearly Rs 20,000 crore from equities in the last 5 trading sessions, make a beeline for China and US

India's retail inflation is projected to surge to 6.15% in October, exceeding the Reserve Bank of India's (RBI) tolerance threshold of 6%, according to a new report by Union Bank of India. The spike is attributed to persistent <keyword id="21013592" type="General" weightage="20" keywordseo="food-price-pressures" source="keywords">food price pressures</keyword> and the waning of favorable base effects from the previous year. Earlier this month, RBI governor Shaktikanta Das also echoed similar sentiments and noted that the inflation print for October 2024 could stay well above 5.5%. This is why, as Das highlighted, cutting interest rates as early as December would be very early and premature The <keyword id="19999655" type="General" weightage="20" keywordseo="Consumer-Price-Index" source="keywords">Consumer Price Index</keyword> (CPI) data for October, which will be released at 4 pm on Tuesday, as opposed to the previous practice of releasing this data at 5:30 pm on the 12th of every month, follows September's inflation reading of 5.49%, up from 3.65% in August 2024. The last time inflation breached the RBI's upper limit was in August 2023. Despite the RBI's anticipation of an October inflation "hump," the Union Bank report suggests that the magnitude of the increase might raise concerns, particularly as November's figures are also tracking at elevated levels. The bank maintains its forecast of unchanged interest rates in December's monetary policy meeting, with a modest 50 basis points rate cut cycle predicted to begin in February 2025. Food inflation remains a key driver of price pressures, with vegetables and edible oils leading the recent surge. In September 2024, India's YoY food inflation rate hit 9.24%, up from 5.66% in the month prior. However, the report projects some easing of food inflation in the January-March quarter, citing typical winter price moderation and improving prospects for rabi crops. Despite this, potential risks from food supply disruptions, imported edible oil prices, and the impact of potential trade tariff hikes will exist. The RBI, which aims to maintain retail inflation at 4%, has held the repo rate steady at 6.5% for the tenth consecutive time in its last meeting as part of its inflation containment strategy. A recent SBI report also noted that expecting rate cuts in this quarter would be immature, and easing was possible only during the first half of 2025. "Given the current estimates of FY25 real GDP growth at 7.2% and CPI at 4.50%, the RBI would quite possibly keep policy rates stable over the coming quarter at least. Emerging trends in the growth outlook would possibly determine the timing and extent of any policy easing. With near-term CPI numbers likely to stay elevated, it’s premature to consider expectations of any easing in the December review. "However, high-frequency data do validate a softness in growth data on an incremental basis. Given the anticipated aligning of CPI closer to the target over H2, a shallow easing, if any can be a reasonable possibility over H1 of CY 25", it added.

Retail inflation expected to breach 6% mark in October, says UBI Report

<keyword id="19913110" type="General" weightage="100" keywordseo="Shaktikanta-Das" source="keywords">Shaktikanta Das</keyword>, the Governor of <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> (RBI), on October 26, received award for A+ grade in <keyword id="23702898" type="General" weightage="20" keywordseo="Central-Bank-Report-Cards" source="keywords">Central Bank Report Cards</keyword> 2024, for the second consecutive year. The award, presented by <keyword id="22224722" type="General" weightage="20" keywordseo="Global-Finance" source="keywords" meta.keywordsubtype="org" meta.entityname="Global Finance" meta.hostid="261" meta.entityid="Global Finance">Global Finance</keyword> in <keyword id="21459434" type="General" weightage="20" keywordseo="Washington-D-C-" source="keywords">Washington D.C.</keyword>, USA, recognised RBI Governor's excellent performance and effective leadership in steering India's apex bank through complex economic challenges. In a social media post on X, RBI posted, "Governor @DasShaktikanta received the award for A+ grade in Central Bank Report Cards 2024, for the second consecutive year. Presented by Global Finance at an event held today in Washington DC, USA." The Central Bank Report Cards, published annually by Global Finance since 1994, grade the central bank governors of nearly 100 key countries, territories, and districts, as well as the European Union, the Eastern Caribbean Central Bank, the Bank of Central African States and the Central Bank of West African States. Grades are based on an "A+" to "F" scale for success in areas such as inflation control, economic growth goals, currency stability and interest rate management. "A" represents an excellent performance, down through "F" for outright failure. Along with Das, Denmark's Christian Kettel Thomsen and Switzerland's Thomas Jordan were also accorded an A+ grade. Brazil's Roberto Campos Neto, Chile's Rosanna Costa, Harvesh Kumar Seegolam of Mauritius, Morocco's Abdellatif Jouahri, South Africa's Lesetja Kganyago and Sri Lanka's Nadalal Weerasinghe were amongst those who received the <keyword id="22446364" type="General" weightage="20" keywordseo="A-grade" source="keywords">A grade</keyword>. European Union's Christine Lagarde was given an A- grade. "After a difficult 2023, when geopolitical pressures gathered with tight monetary conditions to create a near-stagflationary environment in the eurozone, the central bank has managed to inch much closer to its 2% target with successive consumer price index (CPI) readings under 3% since February of this year, down to 2.4% in August", Global Finance noted on Lagarde's tenure. <keyword id="19951097" type="General" weightage="20" keywordseo="US-Fed" source="keywords">US Fed</keyword> Chairman Jerome Hayden Powell received an A- grade. Per the Global Finance website, "The Fed has debated in excruciating, and at times confusing, detail throughout this year when and whether to cut its benchmark rate from a 23-year high of 5.5%, a level held since July 2023. This September, the Fed finally turned the monetary ship toward a policy of easing, with a 50-basis point cut, which was at the higher end of forecasts." "Prior to the rate cut, economists agreed that confusion in the markets was a case of bad communication by the Fed, but Powell’s overall handling of policy has been praised. It is difficult to find much fault with the Fed’s approach to policymaking over the past year. The Fed has appropriately changed its tone in response", it continued. However, it also noted that more-substantial easing in the following months will be crucial to avoid a policy mistake and to secure Powell’s legacy. Powell's term as second-time chair of the Fed Reserve ends on May 15, 2026.

Shaktikanta Das receives award for A+ grade in Central Bank Report Cards 2024 in USA

<ul class="summary-list"><li>Goldman Sachs named 95 partners last week, including private wealth exec Brittany Boals Moeller.</li><li>The 39-year-old runs the Southeast region and leads strategy for young and women clients.</li></ul>Brittany Boals Moeller, one of Goldman Sachs' newly minted partners, didn't picture a career in finance when she joined the bank 17 years ago. She grew up in Jonesboro, Arkansas, where her parents were professors at the local university. After graduating from New York University in 2007, she thought she would work at Goldman Sachs for a few years to save up for graduate school, perhaps to study public policy or become a lawyer. But even when the financial crisis hit, which was an opportune time to go back to school, she didn't want to leave."At Goldman, you are given tremendous responsibility and opportunity young in your career if you prove yourself able," she told Business Insider in an interview. "I've never once been bored, and so it's an easy choice to stay."The 39-year-old is based in Atlanta and runs the Southeast region of Goldman Sach's private wealth division. While wealth management clients skew older, the division has a pipeline of rich millennial founders who work with the investment banking arm. Boals Moeller said these clients in their 30s and 40s are more likely to want more than investment advice, desiring services like concierge healthcare and bill pay that make their lives easier. To keep these clients loyal, she leads an initiative to cater to younger clients, including heirs and self-made entrepreneurs, and another that focuses on women customers."They're busy. They want simplicity. They need good people around them to help," she said.During the dealmaking drought, the <a target="_blank" href="https://www.businessinsider.com/goldman-sachs-private-wealth-management-asset-david-solomon-2023-1">wealth management</a> business gained new prominence. "Quite frankly, private wealth management at Goldman Sachs has never been as much of a focus for the firm as it is today," division cohead John Mallory told BI in 2023.Boals Moeller said the business's current stature is the result of investments more than a decade in the making. She served as chief of staff to wealth management head Tucker York during the financial crisis. Around 2010, she embarked on a listening tour of every wealth office. The advisor feedback led to the bank expanding its offerings beyond investment and tax planning advice."We knew this going way back, and it certainly continues today, which is we are not purely an investment solution for our clients," she said. "Investments are critical and core to our work, but increasingly we're seeing that with the next generation of wealth owners today, they are seeking simplicity and solutions in all aspects of their life."Goldman Sachs' family office offering, Apex, launched a few years later. Now, the division offers chief financial officer services to help clients with not just estate planning but also lifestyle services like cybersecurity.Catering to these younger clients, whether they are old-money heirs or startup founders celebrating their first windfall, requires meeting them where they are. That usually isn't over a steak and martini lunch or 18 holes at the golf course. What entices these clients more, Boals Moeller said, is getting to meet like-minded people.Goldman Sachs holds events and conferences, often with star-studded lineups or in scenic locales. In August, Boals Moeller hosted a reception in Atlanta with singer Ciara and Marc-Kwesi Farrell, the founder of a rum brand that provided custom cocktails. In October 2023, Goldman Sachs hosted a conference in Deer Valley where billionaire Patrón founder John Paul DeJoria talked about keeping a business empire in the family. Sustainability and sports are particularly interesting to this demographic, with Goldman Sachs hosting a tour of a waste-to-clean-energy power plant in Copenhagen and bringing in Michelle Hynik, president of women's football club Utah Royals, to the Deer Valley summit.Advisors also introduce clients to each other when appropriate, such as a pre-IPO founder to an entrepreneur who has already been through the process."A lot of effort is put into helping people not only just manage the risk and obviously the investment side of things, but also the broader piece, which is how do we help you have an amazing corporate outcome from the sale of your business, and how do we help you as a family appropriately prepare for that?" she said.Advisors can meet with families one-on-one for financial education. However, many of these millennial and Gen-Z clients prefer digital education on their own time. Goldman Sachs has courses for children of clients as early as 15 years old. This Semester at GS program has six one-hour sessions that span trading talks from executives in global markets as well as personal finance topics like how to think about a credit score. These virtual sessions are cameras off, Boals Moeller notes."You don't have to be at a desk," she said. "It's not another hour of homework."

This new Goldman Sachs partner is leading the bank's strategy with young heirs and founders

Mumbai: The rupee slipped 1 paisa to an all-time low of 84.40 against the US dollar in early trade on Wednesday, as persistent <keyword id="20520117" type="General" weightage="20" keywordseo="foreign-fund-outflows" source="keywords">foreign fund outflows</keyword> and a muted trend in domestic equities weighed on the local unit. Forex traders said the USDINR pair has shown significant volatility in recent sessions, with the rupee inching closer to its all-time low of 84.40. This downward pressure is largely driven by global factors, particularly the Dollar Index's strengthening. At the interbank foreign exchange, the rupee opened at 84.40 against the greenback, registering a fall of 1 paisa over its previous close. On Tuesday, the rupee fell 1 paisa to a new lifetime low of 84.39 against the US dollar. "It appears that the rupee has established support around the current levels, with depreciation limited near 84.50," CR Forex Advisors MD Amit Pabari said. Pabari further added that the RBI stands tall as the depreciation in the rupee seems to be limited as the <keyword id="19899810" type="General" weightage="100" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> (RBI) continues to sell the dollars to protect the sharp depreciation. "For the 5th consecutive week, India's forex reserves declined, possibly due to RBI selling the dollars. Currently, the forex reserves of India stand at USD 682 billion down from the recent all-time high of USD 704 billion," he said. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.04 per cent at 105.98. Brent crude, the global oil benchmark, rose 0.25 per cent to USD 72.07 per barrel in futures trade. On the domestic equity market front, Sensex was trading 210.66 points, or 0.27 per cent lower, to 78,464.52 points. The Nifty fell 100.45 points, or 0.42 per cent, to 23,783.00 points. Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday, as they offloaded shares worth Rs 3,024.31 crore, according to exchange data. On the macroeconomic front, retail inflation breached the Reserve Bank's upper tolerance level, soaring to a 14-month high of 6.21 per cent in October mainly on account of rising food prices. Inflation based on the consumer price index (CPI) was 5.49 per cent in September and 4.87 per cent in the year-ago month. India's industrial production expanded by 3.1 per cent in September after recording a contraction in the preceding month, as all three major segments -- mining, manufacturing, and power generation -- showed improvement. However, the growth in the Index of Industrial Production (IIP) during the month was lower than 6.4 per cent registered in September 2023.

Rupee falls 1 paisa to all-time low of 84.40 against US dollar in early trade

<keyword id="19898109" type="General" weightage="100" keywordseo="Paytm" source="keywords" meta.keywordsubtype="org" meta.entityname="Paytm" meta.hostid="261" meta.entityid="Paytm">Paytm</keyword> has regained approval from the National Payments Corporation of India (<keyword id="19998946" type="General" weightage="20" keywordseo="NPCI" source="keywords">NPCI</keyword>) to onboard new UPI users, marking a significant turnaround for the fintech giant. This development follows a setback earlier this year when <keyword id="20410154" type="General" weightage="20" keywordseo="Paytm-Payments-Bank-Limited" source="keywords" meta.keywordsubtype="org" meta.entityname="Paytm Payments Bank Limited" meta.hostid="261" meta.entityid="Paytm Payments Bank Limited">Paytm Payments Bank Limited</keyword> (PPBL), an associate company of Paytm, was barred from adding new users to its UPI platform due to regulatory concerns raised by the <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> (RBI). <h2>Paytm gets permission to onboard new UPI users </h2> In a regulatory filing on Tuesday evening, Paytm disclosed that NPCI granted permission for the company to resume onboarding UPI users, provided it complies with all procedural guidelines and circulars issued by the corporation. “We would like to inform you that vide letter dated October 22, 2024, the National Payments Corporation of India (NPCI) has granted approval to the Company to on-board new UPI users, with adherence to all NPCI procedural guidelines and circulars,” Paytm said in the filing. This move is seen as a relief for the company, which has been under scrutiny following the RBI’s intervention in January. The NPCI, which had previously allowed Paytm to operate as a Third-Party Application Provider (TPAP) for UPI transactions, has now reinstated its ability to bring new users onto the platform, albeit with strict conditions. Paytm can continue UPI operations through its partnerships with major banking institutions, including SBI, HDFC Bank, Axis Bank, and YES Bank. The NPCI’s approval comes after a thorough review of Paytm’s compliance with procedural guidelines, including those pertaining to risk management, app branding, multi-bank participation, and data privacy. The fintech firm has been instructed to adhere to key regulatory frameworks, such as the Payments and Settlement Act of 2007 and the Digital Personal Data Protection Act of 2023. This approval follows a request by Paytm’s parent company, <keyword id="20253123" type="General" weightage="20" keywordseo="One97-Communications" source="keywords">One97 Communications</keyword> Ltd (OCL), in August, seeking permission to resume UPI onboarding. The NPCI’s decision also reflects that Paytm has addressed concerns raised in the RBI’s directive from earlier this year, which had highlighted persistent non-compliance issues with its banking subsidiary, PPBL. On a related note, Paytm reported a strong financial performance for the quarter ending September 2024. The company posted a net profit of ₹928.3 crore, a marked improvement from the ₹290.5 crore loss it recorded during the same period last year. <h2>What had happened? </h2> For the unversed, in January 2024, the Reserve Bank of India (RBI) told Paytm Payments Bank Limited (PPBL) to stop accepting deposits and processing UPI top-ups. This decision stemmed from ongoing concerns about the bank’s compliance and serious issues that needed addressing. As a result, Paytm found itself unable to onboard new UPI users, significantly disrupting its growing customer base and raising doubts about its future in the crowded <keyword id="19989657" type="General" weightage="20" keywordseo="digital-payments" source="keywords">digital payments</keyword> market. However, things took a turn for the better in March 2024 when the National Payments Corporation of India (NPCI) gave Paytm the green light to resume UPI transactions. The catch? Paytm could only operate as a Third-Party Application Provider (TPAP), meaning it had to partner with established banks like SBI, Axis Bank, HDFC Bank, and YES Bank for its UPI services. While this arrangement posed some limitations, it allowed Paytm to keep moving forward and adapt to the regulatory challenges it faced in India’s digital payment landscape. (with PTI inputs)

Paytm can onboard new UPI users again, receives NPCI nod months after RBI restrictions

<ul class="summary-list"><li>The American Bankers Association is urging federal action on online financial fraud.</li><li>Banks are facing increased liability for scams, with $10 billion in losses reported last year.</li></ul>Remember the Spider-Man meme where <a target="_blank" class="editor-rtfLink" href="https://www.businessinsider.com/mark-zuckerberg-posts-spiderman-meme-first-tweet-in-a-decade-2023-7">he points at himself</a>? Banks and the federal government are in a similar situation, pointing to each other to solve the problem of online financial scams.For its part, the government wants banks to take on more responsibility, and more consistently refund their customers who fall victim to online scams. Banks, on the other hand, want the government to do more to prevent those scams in the first place.The problem is real. Almost 1 in 3 Americans have been the victim of a scam in the past year, with an average loss of $1,600 a person, according to a study from IPX, a financial analysis firm.According to the Federal Trade Commission, consumers reported more than $10 billion in losses last year from online scams. The agency's data also showed that consumers using payment apps reported <a target="_blank" class="editor-rtfLink" href="https://www.businessinsider.com/new-bill-zelle-fraud-payment-app-waters-blumenthal-warren-2024-8">losing $210 million</a>.It's also a major headache for the banks.American Bankers Association CEO Rob Nichols called for the federal government to create a national scam prevention strategy last week. Nichols also said that Congress should "create and fund" an Office of Scam and Fraud Prevention while speaking to bankers at the association's annual convention in October."The scale of fraud taking place every day is a massive burden for our country and for the millions of hardworking women and men whose lives are affected by it," Nichols said at the convention, according to Forbes. "It will take a united effort — with support from both inside and outside the banking industry — to win this fight."The government, meanwhile, has repeatedly called on financial institutions to improve compensation for victims who lose money to scams.In August, the Consumer Financial Protection Bureau launched an investigation into JP Morgan, Bank of America, and Wells Fargo, all part owners of Zelle.The investigation came after a Senate investigations committee found that reimbursements from the three banks for disputed transactions on the app fell from 62% in 2019 to 38% in 2023.Also in August, three Democratic senators introduced a bill that would update the 1978 Electronic Fund Transfer Act to require financial institutions to share more of the burden when consumers are victimized by fraud.Nichols said at the convention, however, that fighting back against fraud will require "a whole-of-government approach … that starts at the very top." He also said that the government should create "financial crimes intelligence centers." One already exists in Texas, which he said has been a "force multiplier for law enforcement" there.Nichols also called on the FTC to create a database of reported spam text messages available for "all legitimate businesses to access." Nichols said this kind of database would help banks monitor how scams are evolving and "educate their customers" more effectively."

Banks and the federal government point fingers as Americans lose billions to online scams

<ul class="summary-list"><li>American consumers and businesses are having a hard time paying off credit card, auto, and commercial real estate debt.</li><li>US banks have increased their reserves in part to prepare for potential loan losses.</li></ul>US banks are having a harder time <a target="_blank" href="https://www.businessinsider.com/personal-finance/credit-score/what-is-debt-collection">collecting debts</a>, so they're taking precautions.According to Federal Reserve data, the past-due debt share for <a target="_blank" href="https://www.businessinsider.com/paid-off-credit-card-debt-solid-plan-2024-6">credit card</a>, <a target="_blank" href="https://www.businessinsider.com/consumer-credit-card-debt-auto-loans-delinquency-economic-outlook-bofa-2024-9">auto</a>, and <a target="_blank" href="https://www.businessinsider.com/commercial-real-estate-debt-property-losses-mortgage-interest-rates-prices-2024-7">commercial real estate</a> has recently risen to above pre-pandemic levels. The share of debt banks have written off as a loss because they couldn't collect it has also <a target="_blank" class="" href="https://www.federalreserve.gov/releases/chargeoff/chgallsa.htm">ticked up</a>, with the charge-off rate for two of these three loan types the <a target="_blank" class="" href="https://fred.stlouisfed.org/series/CORCCACBS">highest</a> they've been in <a target="_blank" class="" href="https://fred.stlouisfed.org/series/CORCREXFACBS">more than a decade</a>.Business Insider spoke to industry insiders who said this has prompted a response from big banks anticipating a continued increase in bad loans. <a target="_blank" href="https://www.businessinsider.com/largest-banks-us-list">US banks</a> have increased their reserves in recent years, effectively setting aside cash to cover potential loan losses.While it's commonplace for banks to increase their reserves as loan levels rise over time, reserves have started gradually making up a bigger share of total loans at firms like <a target="_blank" href="https://www.wellsfargo.com/assets/pdf/about/investor-relations/earnings/third-quarter-2024-earnings.pdf">Wells Fargo</a>, <a target="_blank" href="https://d1io3yog0oux5.cloudfront.net/_9d388ee07cccbcc3c8dc5bafe2ea4aff/bankofamerica/db/775/10116/webcast_transcript/2024-10-15+BAC+3Q+Earnings+Call_ADA.pdf">Bank of America</a>, <a target="_blank" href="https://www.jpmorganchase.com/content/dam/jpmc/jpmorgan-chase-and-co/investor-relations/documents/quarterly-earnings/2024/3rd-quarter/6bca0e4a-703c-4fff-8e70-f026f015fee5.pdf">JPMorgan</a>, and <a target="_blank" class="" href="https://www.citigroup.com/rcs/citigpa/storage/public/Earnings/Q32024/3Q24-SUPP-ForWeb.pdf">Citigroup</a>. Since June 2022, Wells Fargo's and Bank of America's reserves have risen by about $1.8 billion and $2.4 billion respectively. Still, for context, these firms' cash coffers are still considerably lighter than they were during the Great Recession.<h2 id="3bd35426-2903-4a17-860b-981ba0e86427">America's 3 debt pain points</h2>Each month, the New York Fed <a target="_blank" class="" href="https://www.newyorkfed.org/microeconomics/sce#/debtexp-1">asks</a> roughly 1,300 Americans to estimate the chance they'll be unable to make a minimum debt payment over the next three months. Aside from the pandemic, Americans haven't been this pessimistic since 2017.Consumers' struggles to repay credit card and auto debt suggest that <a target="_blank" href="https://www.businessinsider.com/inflation-september-cpi-consumer-price-index-federal-reserve-interest-rates-2024-10">inflation</a> and <a target="_blank" href="https://www.businessinsider.com/fed-cuts-interest-rates-how-much-september-fomc-powell-inflation-2024-9">interest rates</a>, while moderating in recent months, are still taking a toll on their finances. Additionally, businesses' struggles to pack back commercial real estate debt show that factors like elevated interest rates and the <a target="_blank" href="https://www.businessinsider.com/office-market-interest-rates-commercial-real-estate-federal-reserve-pandemic-2024-9">remote work revolution</a> are still having lingering effects.Here's a closer look at each of the three debt categories:<h3 id="df61242d-618b-4bfb-824d-874b5a53ce4d">Credit card debt</h3>As of the second quarter of this year, more than <a target="_blank" class="" href="https://fred.stlouisfed.org/series/DRCCLACBS">3%</a> of all credit card accounts in the US had past-due balances — up from less than 2% in 2021.The steady uptick in past-due credit card debt over such a short period of time provides some cause for concern, Bruce McClary, a nonprofit credit counselor and senior vice president at the National Foundation for Credit Counseling, told BI."What we are seeing is that people are struggling to repay debt while continuing to use up what is left of their available credit — forcing more people to start falling behind on their payments and into the hands of debt collectors," he said.David Schiff, senior managing director at FTI, told BI that prolonged debt-repayment problems will eventually present a bigger risk to the economy.The increase in reserves raises "real concerns about the softness of certain assets classes — specifically ongoing uncertainty around the commercial real estate market, and increasing worry about the number of revolving credit card customers and their rapidly growing balances," Schiff told BI.<h3 id="2c271636-eeeb-43a1-a28b-b69f0c808b83">Auto debt</h3>A Federal Reserve <a target="_blank" class="" href="https://www.federalreserve.gov/econres/notes/feds-notes/rising-auto-loan-delinquencies-and-high-monthly-payments-20240926.html">report</a> published on September 26 found that auto loan delinquency rates rose "substantially" above pre-pandemic levels by the end of 2023, driven in large part by growth in monthly debt payments.In fact, a growing number of Americans owe more than their cars are worth, according to a <a target="_blank" href="https://affiliate.insider.com?h=76e351eb917843c15c21c91acd7d8e92304c81583e3e5bb129c38093d6e7aff2&amp;postID=67114ad8434c477c23344eb6&amp;postSlug=big-banks-preparing-loan-loss-credit-card-auto-debt-cre-2024-10&amp;site=bi&amp;u=https%3A%2F%2Fwww.edmunds.com%2Findustry%2Fpress%2Fnegative-equity-on-the-rise-the-average-amount-owed-on-upside-down-car-loans-hit-an-all-time-high-in-q3-2024-according-to-edmunds.html%3Futm_source%3Dsubstack%26utm_medium%3Demail">report</a> published on October 15 by the automotive website Edmunds. Stephen Biggar, director of financial services research at Argus Research, told Business Insider that if a bank is forced to repossess such a vehicle, the car's value wouldn't even cover the loan, resulting in losses to the bank. He said that the uptick in auto delinquencies is "not a spike, but is kind of a concern about what goes on from here."<h3 id="108a8464-8ec8-4eb3-8b19-f2eb7af18b2d">Commercial real estate</h3>Another problem for banks is that some businesses with commercial real estate loans are struggling to repay them. Biggar said some of this is tied to high vacancy rates among offices. While many companies have called employees back to the office since the height of the pandemic, office vacancy rates still <a target="_blank" href="https://www.axios.com/2024/07/09/office-vacancy-rate-record-high">rose</a> to <a target="_blank" href="https://www.businessinsider.com/real-estate-outlook-office-buildings-vacancies-commerical-markets-investors-remote-2024-1">record highs</a> over the past year.Elevated interest rates have also made it difficult for businesses to pay back debt on commercial real estate loans related to offices, retail, hotel, and apartment building properties, among others. That's because some loans are coming due — forcing businesses to refinance at <a target="_blank" href="https://www.businessinsider.com/commercial-real-estate-big-trouble-crash-bank-crisis-2024-2">much higher interest rates</a>.To be sure, we're still far from a debt crisis: The share of past-due and charged-off debt generally remains in line with historical levels after rising from pandemic-era lows. Additionally, some banks are simply restoring reserves that were depleted during the pandemic. However, if the <a target="_blank" class="" href="https://www.businessinsider.com/recession-outlook-economy-layoffs-inflation-spending-job-market-tariffs-morgan-stanley-2024-10">economy slows</a> and the <a target="_blank" class="" href="https://www.businessinsider.com/job-market-recession-unemployment-rate-september-payrolls-report-fed-cuts-2024-10">unemployment rate</a> rises further, the uptick in delinquencies could become a larger concern, Biggar said.<h2 id="3723386c-1711-4911-97f5-b3d9337f3327">Wall Street acknowledgement</h2>While <a target="_blank" href="https://www.businessinsider.com/wall-street-banks-earnings-calls-interest-rates-fed-cuts-debt-2024-10">banking executives</a> this earnings season generally spoke highly of the economy, they did acknowledge that elevated prices and interest rates continue to weigh on American consumers."Our customers are healthy, but more discerning in their spend with signs of stress isolated," <a target="_blank" class="" href="https://www.fool.com/earnings/call-transcripts/2024/10/15/citigroup-c-q3-2024-earnings-call-transcript/">said</a> Jane Fraser, Citi's CEO, referring to consumers with lower credit scores.Brian Moynihan, Bank of America's CEO, <a target="_blank" href="https://www.fool.com/earnings/call-transcripts/2024/10/15/bank-of-america-bac-q3-2024-earnings-call-transcri/">said</a> that overall consumer spending remains strong but that "consumers are worried of the cost of living, worried about higher rates, and other matters."Charles Scharf, Wells Fargo's CEO, <a target="_blank" class="" href="https://www.fool.com/earnings/call-transcripts/2024/10/11/wells-fargo-wfc-q3-2024-earnings-call-transcript/">said</a> the bank hasn't seen "meaningful changes" in delinquency rates across its credit portfolio, but that there is evidence of financial strain among some Americans."We continue to see more pronounced stress in certain customer segments with lower deposit and asset levels where inflation has partially offset strong employment and wage growth," he said.Jeremy Barnum, JPMorgan's CFO, <a target="_blank" class="" href="https://www.fool.com/earnings/call-transcripts/2024/10/11/jpmorgan-chase-jpm-q3-2024-earnings-call-transcrip/">said</a> that consumers' discretionary spending has "normalized" following particularly strong levels in recent years.The financial roller coaster of pandemic payments, whipsawing inflation, and high interest rates are especially affecting lower-income Americans."We know consumers at a certain income level and below are strapped," Biggar said, adding, "There's been a lot of concern, particularly at the lower income category, that people are unable to make ends meet."Going forward, Biggar said that many banks could continue adding to their reserves, particularly if the unemployment rate rises further. That might not ultimately be necessary, since the jobless rate has <a target="_blank" href="https://fred.stlouisfed.org/series/UNRATE">stabilized</a> over the past two months after a surprise increase."I'm not expecting any big spike from here unless the unemployment rate moves materially higher," Biggar said of further reserve reinforcements.

Big banks are bracing for losses as Americans struggle to pay off debt

<ul class="summary-list"><li>The <a target="_blank" href="https://www.businessinsider.com/guides/deals/black-friday-deals">holiday shopping season</a> continues to start earlier in the year, thanks largely to Amazon.</li><li>Amazon's 48-hour deals event is underway, along with competing sales by the major retailers.</li></ul>Nevermind Black Friday, <a target="_blank" href="https://www.businessinsider.com/october-becoming-new-black-friday-amazon-walmart-target-sales-2024-9">Green October is in full swing</a>.The holiday shopping season is underway earlier than ever, thanks largely to Amazon moving up its <a target="_blank" class="" href="https://www.businessinsider.com/guides/deals/best-prime-day-deals-big-deal-days-2024-10">Prime Day</a> deals event.Faced with what would ordinarily be a shorter stretch of discounting (Thanksgiving and Christmas are closer together on the calendar than usual), the e-commerce juggernaut is pulling the start of the spending spree into early October.And in modern retail, many competitors look to follow what Amazon does to stay competitive.As Amazon has inched its 48-hour event earlier — from October 11 and 12 in 2022, to October 10 and 11 in 2023, and now to October 8 and 9 this year — competing promos by major retailers are also stepping up to win shoppers' dollars.Target kicked off the sequence early on Sunday with its Circle Week, while Walmart's Deals event gets underway online on Tuesday and in stores on Wednesday.The quasi-gravitational influence of all this promotional activity has even roped Costco into the mix with a Member Savings Event that started on Monday. Costco isn't typically a trend-chasing company, so it's notable that it's on the pre-holiday deals bandwagon during this particular week in October ahead of its formal start to holiday savings in November.Even if the traditional interval between Thanksgiving and Christmas was on the longer side, it would make sense for this further encroachment into pre-Halloween deals to occur.As inflation has eased off, the big lesson for retailers over the past year is that <a target="_blank" href="https://www.businessinsider.com/americans-budget-era-value-retail-walmart-target-tj-maxx-2024-8">customers are still willing to spend</a> — if the price is right. US shoppers also splurged for celebrations and special occasions.What better way for retailers to tap into those trends than to <a target="_blank" href="https://www.businessinsider.com/history-of-amazon-prime-day-impact-on-retail-industry2023-7">invent a holiday that celebrates deals</a> and kicks off a whole season of festivities?

Amazon's jump-start to the holiday shopping season has even roped in Costco this year

The Reserve Bank of India (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) has started its three-day monetary policy committee (MPC) meeting in Mumbai on Tuesday. The meeting will conclude on Thursday, when the RBI will announce its decisions on the <keyword id="20094323" type="General" weightage="100" keywordseo="repo-rate" source="keywords">repo rate</keyword> and other matters. The repo rate, which has been maintained at 6.5 per cent since it was last increased in February 2023, is widely expected by experts to remain unchanged for the ninth consecutive bi-monthly policy review. Experts highlight that <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword> in India remains above the RBI's target range, making it unlikely that the central bank will implement policy cuts until inflation reaches the target of 4 per cent. However, the expert added that the RBI may consider rate cuts in the October meeting. Banking expert Ashutosh Khajuria commented: "Monetary Policy Committee (MPC) may continue to hold the policy signalling Repo rate and wait for <keyword id="19979707" type="General" weightage="20" keywordseo="Consumer-Price-Inflation" source="keywords">Consumer Price Inflation</keyword> to decisively fall below 4 per cent, the target rate. For the present, the continuation of the current stance is widely expected. MPC in India may change the stance and rate action by the beginning of the second half of the year in their October meeting at the earliest." The experts also noted that while <keyword id="20196112" type="General" weightage="20" keywordseo="core-inflation" source="keywords">core inflation</keyword> has been contained and commodity prices, particularly metals, have dropped by 15-20 per cent from their 2024 peak, food inflation remains a concern and needs to be closely monitored to ensure stability in overall CPI numbers. The Managing Director of a major bank, who preferred not to be named, told ANI: "During the last policy meeting we could see some voting in favour of a <keyword id="19920203" type="General" weightage="20" keywordseo="rate-cut" source="keywords">rate cut</keyword>. At the same time, we could see The Reserve Bank of India's (RBI) Governor Shaktikanta Das on July 11 said it is too early to talk on the interest rate cut due to the uncertain economic environment and inflation remaining close to five per cent. Considering both, our expectation is that the rate cut cycle may start from the next meeting and no change in <keyword id="19950650" type="General" weightage="20" keywordseo="interest-rates" source="keywords">interest rates</keyword> this time." RBI Governor Shaktikanta Das had also emphasised in the last policy briefing that food inflation is still a concern and that the regulator is not in a hurry to make a decision on rate cuts. A recent report by the State Bank of India (SBI) also noted that Consumer Price Inflation in India is expected to remain around 5 per cent for the financial year 2024-25, except for the months of September and October.

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