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The <keyword id="21570567" type="General" weightage="100" keywordseo="credit-offtake" source="keywords">credit offtake</keyword> continued to grow at the rate of 13.9% year-on-year to reach Rs. 168.1 lakh crore for the fortnight ending July 12, 2024. However, the pace of growth was slow, a Care Edge report said. Credit offtake is a type of <keyword id="19946069" type="General" weightage="20" keywordseo="bank-credit" source="keywords">bank credit</keyword> that assists businesses in getting financing for future projects. The credit offtake increased by 14.0% year-on-year, but declined by 0.4% sequentially for the fortnight ended July 12, 2024. Over the last twelve months, credit offtake expanded by Rs. 20.4 lakh crore. The report attributed the sluggishness to the higher base effect and banks' focus on restraining the credit-to-deposit (CD) ratio. <keyword id="20218853" type="General" weightage="20" keywordseo="deposits" source="keywords">Deposits</keyword> grew by 11.3 % year-on-year for the fortnight, including the impact of the HDFC merger, reaching Rs. 211.8 lakh crore, driven by growth in time deposits. "The <keyword id="20575555" type="General" weightage="20" keywordseo="credit-to-deposit" source="keywords">Credit to Deposit</keyword> ratio stood at 79.4 % for the fortnight (July 12, 2024). Meanwhile, if we study the credit and deposit inflows over the past 3 months and 6 months, we can observe that credit offtake has lagged the deposit growth numbers. Hence, the <keyword id="20048508" type="General" weightage="20" keywordseo="CD-ratio" source="keywords">CD ratio</keyword> derived from these flows from January would be around 70% and from March would be approximately 54%," the report added. The report added that going forward, bank credit offtake could face challenges, and is likely to be tepid for the entire year. Inflows over the past three and six months show credit offtake at 5.3% for six months and 2.3% for three months, lagging behind deposit growths of 6.0% and 3.4% respectively. Deposits rose by 11.3% year-on-year for the fortnight, but declined by 0.5 % sequentially. In absolute terms, deposits expanded by Rs. 23.9 lakh crore over the last twelve months. The report anticipated that the deposit is expected to be strong in FY25, as banks focus on strengthening their liability franchise, sourcing funds through certificates of deposit, despite higher costs. As per the data in the report, the absolute growth in credit offtake was Rs. 8.4 lakh crore for six months, and Rs. 3.8 lakh crore for three months, lagging behind deposit growth of Rs. 11.9 lakh crore and Rs. 7.0 lakh crore for the same periods. The CD ratio has floated around 80 % since September 2023, standing at 79.4 % for the fortnight ending July 12, 2024, as per the report.

Credit offtake expanded by Rs. 20.4 lakh crore, deposits by Rs 23.9 lakh crore over the last 12 months

Kolkata, Outlook for bank <keyword id="6354680" type="General" weightage="20" keywordseo="credit" source="Orion">credit</keyword> offtake remains positive in 2024 while deposit growth is expected to improve, according to the latest research report of <keyword id="19974164" type="General" weightage="20" keywordseo="careedge-ratings" source="keywords">CareEdge Ratings</keyword>. The report said that credit offtake continued to grow, increasing 20.3 per cent year-on-year to reach Rs 159.7 lakh crore for the fortnight ending January 12, 2024. The rise was due to the impact of the merger of <keyword id="19896378" type="General" weightage="20" keywordseo="hdfc" source="keywords">HDFC</keyword> with <keyword id="19895995" type="General" weightage="20" keywordseo="hdfc-bank" source="keywords">HDFC Bank</keyword> along with growth in personal loans. If the impact of the merger is excluded, credit grew at a lower rate of 16.1 per cent year-on-year for the fortnight compared to last year's growth of 16.5 per cent, the report said. Deposits also grew 13.1 per cent year-on-year the fortnight (including the merged impact). The report said that deposit growth is expected to improve in 2024. The outlook for credit offtake continues to remain positive in 2024 supported by factors like economic expansion and continued push for retail credit supported by increasing digitalisation, according to the report. Unsecured personal loans and <keyword id="19938496" type="General" weightage="20" keywordseo="nbfc" source="keywords">NBFC</keyword> advances might witness a certain level of cooling off, the report said, adding that currently, capital levels are quite comfortable for banks and NBFCs. Higher interest rates, inflation and global uncertainties regarding geo-political issues are other key factors which could weigh on credit growth, the report said. The credit-deposit (CD) ratio has been generally hovering below 80 per cent since September 2023, the report said. The CD ratio saw an uptick of 44 basis points and stood at 79.9 per cent in the fortnight ending January 12, 2024, reaching a three-year high. Deposits have seen relatively steady performance since the COVID times, the report said. However, in recent years, credit growth has been significantly outperforming deposit growth, it said.

Outlook for bank credit offtake remains positive in 2024: CareEdge Ratings

<ul><li>Indian banks are on course to repeat their stellar Q3 performance again in Q4, driven by a strong momentum in credit growth as well as a decline in provisions. </li><li>While strong performance is all but given, eyes are now on what lies ahead for Indian banks. </li><li>From <keyword id="182694" type="General" weightage="20" keywordseo="casa-deposits" source="Orion">CASA deposits</keyword> falling to a 7-year low in FY23, to economic slowdown forcing the brakes on <keyword id="411493" type="General" weightage="20" keywordseo="credit-offtake" source="Orion">credit offtake</keyword>, here are the key things to watch out for as Indian banks head into the Q4 <keyword id="198950" type="General" weightage="20" keywordseo="earnings-season" source="Orion">earnings season</keyword>.</li></ul>Indian banks are on course to repeat their stellar Q3 performance again in Q4, driven by a strong momentum in credit growth as well as a decline in provisions. While strong performance is all but given, eyes are now on what lies ahead for Indian banks. Analysts caution that there could be a few uncertainties on the horizon. One of those concerns is already reflected in the share of CASA (current account and savings account) deposits of banks, which have hit a 7-year low of 11.7% as part of the overall deposits. According to data from the Reserve Bank of India, since FY14, the share of CASA in overall deposits was the highest in FY22 at 12.7%. It has seen a sharp decline of 106 basis points since then. <a href="https://public.flourish.studio/visualisation/13360978/">https://public.flourish.studio/visualisation/13360978/</a> CASA deposits are one of the cheapest sources of funds for banks, and a decline in these deposits means banks have to go for relatively more expensive alternatives. While interest rate on savings account deposits has remained in the range of 3%, a hike in interest rates by the RBI’s Monetary Policy Committee (MPC) has made fixed deposits a better option – interest rate on fixed deposits has increased by an average of 100 basis points, with State Bank of India offering as much as 7% interest on FDs. Looking beyond the CASA fall: Margin pressures, risk of slowdown in loan growth Apart from the slowdown in CASA deposits, a likely increase in margin pressures and risks of a sharp slowdown in loan growth are some of the key factors to watch out for going forward, according to analysts. “We are probably closer to the peak on net interest margin for banks as the cost of funds is likely to move faster than lending yields,” said a report by Kotak Institutional Equities. Concerns of a looming economic slowdown could also lead to a slowdown in loan growth, and there are minor signs pointing at a moderation already. According to the latest data from the Reserve Bank of India, credit growth stood at 15.7% year-on-year in March 2023, down from the highs of 18% seen in October last year. This was primarily led by a slowdown in corporate loans, and “signs of some sluggishness in retail are also on the horizon due to rising interest rates”, said a report by Emkay Global. Expect healthy performance in a seasonally strong quarter The March quarter is considered a seasonally strong one for banks, and there is a broad analyst consensus that banks will post strong growth across key metrics like net interest income, net interest margins, credit growth and asset quality improvements. Analysts expect robust credit offtake, pegging the growth in loan book to be around 17%. Net interest margins are expected to remain steady as lenders continue to transmit repo rate hikes, offsetting the increase in deposit costs. “Healthy growth, steady margins and normalised credit cost is expected to keep earnings momentum unabated at 33.7% year-on-year ₹42,975 crore,” said a report by ICICI Direct. Analysts at Emkay Global have pencilled in a minor slow down on a sequential basis, but maintained that by and large, earnings growth is expected to remain healthy. While the overall scenario for Indian banks in Q4 looks optimistic and a repeat of Q3 is likely on the cards, especially post the business updates given by HDFC Bank and IndusInd Bank, the focus is now on the future outlook and it will be one of the key things to watch out for heading into the Q4 earnings season. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/fpis-offload-it-oil-gas-stocks-worth-13734-crore-in-march/articleshow/99375107.cms">FPIs offload IT, oil &amp; gas stocks worth ₹13,734 crore in March; remain net sellers of Indian stocks for 2 years running</a> <a href="https://www.businessinsider.in/business/telecom/news/telecom-companies-q4-revenue-likely-to-moderate-due-to-lack-of-significant-tariff-hikes/articleshow/99368163.cms">Telecom companies’ Q4 revenue likely to moderate due to lack of significant tariff hikes</a> <a href="https://www.businessinsider.in/finance/news/rbi-revises-indias-fy24-growth-outlook-expects-softer-inflation-on-the-back-of-lower-commodity-prices/articleshow/99290005.cms">RBI revises India’s FY24 growth outlook, expects softer inflation on the back of lower commodity prices</a>

Strong Q4 on the cards, but concerns emerge on fall in CASA deposits and credit offtake slowdown

Retail assets <keyword id="141555" type="General" weightage="20" keywordseo="securitisation" source="Orion">securitisation</keyword> volumes witnessed a sharp rise of 113% year-on-year to Rs 33,000 crore in first quarter of financial year 2022-23. This was on back of as usual business activities on account of low curbs on movement of people or goods allowed the economic activity to continue and aid the gradual improvement in credit uptake. Last year in the same period, securitisation volume was around Rs 15,500 crore. The retail market volume was again driven by direct assignment transactions, which had a lion's share of 61% of the overall size, while the remaining share was that of pass through certificate deals. Within direct assignment, the dominant asset class was mortgage-backed securitisation (MBS) with an aggregate size of around Rs 13,000 crore, followed by asset-backed securitisation (ABS) at around Rs 4,000 crore, which includes pools backed by all the asset classes. Meanwhile, pass through certificate's volume was mainly driven by ABS pools contributing around 73% of the total issuances. The leading asset class driving PTC issuances was vehicle loan financing at around Rs 7,600 crore accounting for around 59%. "There are signs of overall improvement in the level of economic activity and we expect strong growth in disbursements by NBFCs sector backed by rising credit uptake. This coupled with the focus on retail loan book expansion through inorganic channels and increased pressure to meet <keyword id="46657" type="General" weightage="80" keywordseo="psl" source="Orion">PSL</keyword> requirements for banks augurs well for the securitisation market as a whole," <keyword id="12745023" type="General" weightage="80" keywordseo="careedge" source="Orion">CareEdge</keyword> said in a report. CareEdge believes that this will lead to around 40% increase in overall retail volumes in FY23 as compared with FY22. SEE ALSO : <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/science/health/news/swine-flu-resurfaces-in-keralas-wayanad-first-time-in-kannur/articleshow/93267832.cms">Swine flu resurfaces in Kerala's Wayanad, first time in Kannur</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/amazon-great-freedom-festival-date-announced-sale-starts-august-6-onwards/articleshow/93268050.cms">Amazon Great Freedom Festival date announced - sale starts August 6 onwards</a>

Securitisation of retail assets jumps 113% on higher credit offtake

<ul><li>With an increase in <keyword id="6354680" type="General" weightage="20" keywordseo="credit" source="Orion">credit</keyword> offtake, the <keyword id="568129" type="General" weightage="20" keywordseo="credit-deposit-ratio" source="Orion">credit deposit ratio</keyword> reached almost 75.04% as of April 7, 2023. </li><li>In April, the banking system's liquidity changed from a deficit to a surplus due to government spending and the Reserve Bank of India's (RBI) foreign exchange intervention.</li><li>In the current environment of rising interest rates, the median 1-year MCLR for Scheduled Commercial Banks increased from 8.55% in March 2023 to 8.6% in April 2023.</li></ul>In March 2023, both lending and deposit rates rose, but the rate of increase was faster for the deposit rates than lending rates. Moreover, the rates for fresh business (new loan taken by a borrower) have increased at a faster clip when compared to rates for outstanding business (old loan that is yet to be repaid). March also witnessed a surge in <keyword id="632526" type="General" weightage="20" keywordseo="credit-demand" source="Orion">credit demand</keyword> due to growth seen in personal loans, working capital loans, and the participation of non-banking financial companies (NBFCs) resulting in double-digit growth, according to a BFSI Research report by credit rating agency CareEdge. <cmsannotation type="cmsannotation" annotationid="Credit deposit ratio reaches almost 75.04% on April 7" comment="subhead" text="Credit deposit ratio reaches almost 75.04% on April 7"><keyword id="5173780" type="General" weightage="20" keywordseo="credit-deposit" source="Orion">Credit deposit</keyword> ratio reaches almost 75.04% on April 7</cmsannotation> However, the mobilisation of deposits has been relatively low, and the credit offtake has increased, causing the credit deposit ratio to reach almost 75.04% as on April 7, 2023. At the beginning of FY23, the banking system had a surplus of ₹6.3 lakh crore in liquidity. However, it has reduced over time and eventually turned into a deficit towards the end of FY23. Hence liquidity had been injected into the system. In April, the banking system's liquidity changed from a deficit to a surplus due to government spending and the Reserve Bank of India's foreign exchange intervention. However, the liquidity infusion was somewhat offset by the redemption of long-term repo operation (LTRO) and targeted long-term repo operation (TLTRO). LTRO and TLTRO are monetary policy tools used by the RBI to inject liquidity into the banking system. <cmsannotation type="cmsannotation" annotationid="Weighted average call rate rises to 6.52% as on April 21" comment="subhead" text="Weighted average call rate rises to 6.52% as on April 21">Weighted average call rate rises to 6.52% as on April 21</cmsannotation> To maintain liquidity at a neutral level, the RBI may continue to conduct variable rate reverse repo (VRRR) auctions – a tool used by the RBI to manage liquidity in the banking system. There has been an increase in the short-term weighted average call rate (WACR) from 3.53% as of April 22, 2022, to 6.52% as of April 21, 2023. This rise in WACR can be attributed to a combination of higher policy rates and a reduction in liquidity within the system. The WACR is an indicator of the overall liquidity conditions in the banking system. <cmsannotation type="cmsannotation" annotationid="Lending rates on the rise" comment="subhead" text="Lending rates on the rise">Lending rates on the rise</cmsannotation> The weighted average lending rate (WALR) – which is the weighted average of all the interest rates that a bank charges on its outstanding loans – on fresh loans has continued to increase month-over-month (M-o-M). For public sector banks (PSBs) it’s up by 11 basis points (bps), for private sector banks (PVBs) by 21 bps, and for scheduled commercial banks (SCBs) by 8 bps. The lending rates on fresh loans for PSBs, PVBs, and SCBs have surpassed their levels in March 2020. In addition, the WALR on outstanding loans has also increased M-o-M across all segments – for PSBs by 7 bps, for PVBs by 4 bps, and for SCBs by 5 bps. Interestingly, foreign banks have experienced a decrease in their lending rates. The spread between the WALR on outstanding loans and WALR on fresh loans for PSBs and PVBs has continued to narrow M-o-M due to a higher increase in WALR on fresh loans than on outstanding loans. In the current environment of rising interest rates, the median 1-year MCLR (marginal cost of funds-based lending rate) for SCBs increased from 8.55% in March 2023 to 8.60% in April 2023. Despite the Monetary Policy Committee (MPC) taking a pause from rate increase at its last meeting, banks have continued to raise rates. This has had a faster impact on the lending rate of new loans, while older loans are re-priced based on specific repricing dates. As a result, the spread between the WALR for outstanding loans and the WALR for new loans is expected to narrow in the short term and stabilise in the medium term.

Deposit rates rise faster than lending rates in March 2023: CareEdge

Mumbai, Oct 10 (IANS) Although the banks remain flush with liquidity and interest rates lowered significantly, credit offtake from banks was very low and "anaemic" during the first half of the current financial year (2020-21). The low credit offtake can be attributed to the weak demand and persistent uncertainty amid the pandemic. "During H1 2020-21, bank credit offtake was anaemic, reflecting weak demand and uncertainty in the wake of the pandemic," showed the Monetary Policy Report for the October 2020 released by the Reserve Bank of India (RBI). It showed that non-food credit growth (y-o-y) was 5.1 per cent as of September 25, 2020, lower than 8.6 per cent a year ago, driven by weak momentum and base effects. It noted that the slowdown in credit growth was spread across all bank groups, especially foreign banks. Credit growth of the public sector banks remained modest, although with some uptick since March 2020. "Of the incremental credit extended by the scheduled commercial banks (SCBs) on a year-on-year basis (September 27, 2019 to September 25, 2020), 62.3 per cent was provided by the public sector banks and 41.2 per cent by the private sector banks, while the share of the foreign banks turned negative," said the report. The deceleration in non-food credit growth was broad-based, with credit offtake slowing down in all the major sectors. Though personal loans and credit to agriculture registered some improvement in July 2020, the momentum could not be sustained in August. Credit growth to services and industrial sectors has also tapered off after showing some promise in the Q1 of FY21. Personal loans accounted for the largest share of total credit flow in August 2020, followed by services. While the share of personal loans, services and agriculture increased in August 2020 vis-a-vis the previous year, the share of industry contracted. --IANS rrb/sn/tsb

Bank credit offtake remained poor in Apr-Sep: RBI report

With credit off-take increasing, <keyword id="36838" type="General" weightage="20" keywordseo="indian-banks" source="Orion">Indian banks</keyword> are expected to issue bonds to maintain their capital levels and support their advances while cost of funds -- deposits and borrowings are likely to increase, said CARE Ratings. "To support credit-off take, banks are expected to shore up their liability franchise by raising capital (<keyword id="2542652" type="General" weightage="20" keywordseo="AT1-bonds" source="Orion">AT1 bonds</keyword>, other debt instruments such as infrastructure bonds) and deposits. The market has been facing lower liquidity and elevated inflation, hence borrowing costs for deposits and the cost of raising capital are expected to increase," the credit rating agency said in a report. The banks are increasing their interest rates for deposits and plans for bonds issue. Further, profitability is also expected to support the capital base of the banks. Overall, the <keyword id="4960825" type="General" weightage="20" keywordseo="scheduled-commercial-banks" source="Orion">scheduled commercial banks</keyword> (SCB) are expected to remain adequately capitalised in the near term. All SCBs have maintained their Capital Adequacy Ratio (CAR) greater than the minimum required level for Q3FY23. The median CAR and Common Equity Tier 1 (CET-1) ratio of SCBs witnessed a rise in Q3FY23 over Q3FY22 and Q3FY21, the report notes. According to CARE Ratings, the net profit of SCBs grew by 45 per cent year-on-year (y-o-y) to Rs 0.65 lakh crore in Q3FY23 driven by a higher pre-provisioning operating profit (PPOP) growth compared to a lower growth in provisions. The net interest income growth and stability in non-interest income helped PPOP to grow by 28.5 per cent y-o-y to Rs 1.30 lakh crore in Q3Y23. Meanwhile, provisions rose by 9.1 per cent to Rs 0.38 lakh crore. Public sector banks' net profit rose by 64.3 per cent y-o-y to Rs 0.29 lakh crore in Q3FY23, meanwhile private sector banks' grew by 32.2 per cent y-o-y to reach Rs 0.35 lakh crore in Q3FY23, the report added. Return on Assets of SCBs improved by 28 bps y-o-y to 1.23 per cent. At present, banks are in a better position after navigating the Covid period and managing mounted NPAs. Healthy credit growth, improvement in asset quality, and lower growth in provisions due to lower incremental slippages and reduction in restructuring books are expected to generate healthy net profit growth. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/personal-finance/news/presumptive-taxation-the-scheme-that-eases-burden-on-small-businesses/articleshow/98183636.cms">Presumptive taxation: The scheme that eases burden on small businesses</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/elephant-will-not-march-but-run-powered-by-private-consumption-union-amc/articleshow/98182584.cms">Elephant will not march but run, powered by private consumption: Union AMC</a>

Indian banks to issue bonds to maintain capital levels: CARE Ratings

The COVID-19 pandemic and the ensuing economic impact will lead <keyword id="612887" type="PERSON" weightage="20" keywordseo="Bank-credit-growth">bank credit growth</keyword> to nosedive to only 1 per cent in 2020-21, as against the 6.14 per cent achieved in the the last financial year, a report said on Monday. Domestic rating agency Crisil, which estimates bank credit growth to come at 0-1 per cent in this financial year, had earlier predicted it to expand by 8-9 per cent. Bank credit is an important factor illustrative of the general economic climate because it denotes aspects like the investments which are happening in a country or consumption of high-value items. Crisil expects a 5 per cent contraction in India's GDP for 2020-21. "The impact of the pandemic on credit growth will be a whopping 8 per cent," a Crisil statement said stressing that lenders' confidence needs to be boosted to push the number up. "This crisis is unprecedented and so will be its economic fallout – such as lower capex demand as well as lower discretionary spends, to name some – which will slow down credit offtake significantly across segments in the current fiscal," its senior director Krishnan Sitaraman explained. The low-base and a gradual economic recovery will push up the credit growth to high single digits in 2021-22, the agency said. It, however, rued that in the present, the uncertainty has made lenders risk-averse. "While the Reserve Bank of India has been reducing policy rates and the government has introduced measures to encourage lending, banks continue to be risk-averse, as reflected in higher surplus liquidity parked with the central bank and the high credit spreads for most borrowers," its director Subha Sri Narayanan said. Sitaraman said the corporate loan portfolio, which constitutes over half of the overall assets, will be the worst hit and is expected to de-grow during the fiscal because the lockdown has led to significant disruption in operations with limited capacity utilisation across sectors. Job losses and salary cuts will reduce expenditure on discretionary items and result in a slide in retail loans, which account for about a fourth of bank credit, it said. Purchase of new homes and vehicles are expected to be delayed, impacting demand for financing, it said, adding disbursements across most asset classes will see a significant decline this fiscal. The overall retail loans growth will fall to low single digits as against mid-teens over the last few years, it said. Factors aiding the retail growth to be in the positive territory will be lower repayments due to the moratorium and capitalization of the accumulated interest, it said. Loans to micro, small and medium enterprises and agriculture offer some solace for lenders this fiscal, the rating agency said. On the back of the government's fiscal stimulus package, small business loans will increase by 6-7 per cent and are likely to be driven by state-owned lenders, it said. Agri loans will grow by 3-4 per cent supported by expectations of a normal monsoon and a faster recovery in rural areas. SEE ALSO: <a href="https://www.businessinsider.in/finance/news/sbi-axis-bank-and-kotak-mahindra-bank-and-other-banking-stocks-are-raising-capital-to-fill-npa-hole/articleshow/76054599.cms">Indian lenders like SBI, Axis Bank and others need $20 billion⁠ in capital— most of it will go into filling up NPA holes</a> <a href="https://www.businessinsider.in/business/news/yes-bank-case-ed-raids-five-premises-of-cox-and-kings-in-mumbai/articleshow/76256791.cms">Yes Bank's top borrower Cox and Kings sees raids at five of its premises</a> <a href="https://www.businessinsider.in/stock-market/markets/news/sbi-share-price-is-up-5-are-brokerages-raise-target-prices-to-over-200/articleshow/76254529.cms">SBI share price is up 5% as brokerages raise target prices to over ₹200</a>

CRISIL forecasts bank credit growth will plummet to 1% with the economic fallout COVID-19

(Eds: Adds Das quotes) Mumbai, Feb 24 () Slowing credit growth is one of the most critical challenges for the banking industry and there is a need to focus on prudent lending by the banks, Reserve Bank of India Governor Shaktikanta Das said on Monday. So far this year, credit growth in the country has moderated to 7-7.5 per cent. "The most critical challenge today for banks not just in India but also elsewhere is slowing credit offtake. It affects the profitability of banks," Das said at the Mint annual banking conclave here. To facilitate the flow of credit, the RBI has taken several steps like reducing repo rate, facilitating bank refinance to NBFCs for onlending to priority sector and providing long-term repo operation (LTRO), among others, he said. With such measures already in place, banks need to focus on credit offtake and flow of credit. "While doing all that the focus should be on doing prudent lending and also to improve the operational efficiency of the banks," he said. "Prudent lending doesn't mean that you (bank) stifle and stop sanctions of loans and other things because you (bank) need to lend and unless you lend, how do you improve your profitability," the governor said. He said the strength of a banking system depends on the strength of its corporate governance that fosters a robust and ethics-driven compliance culture. "The RBI can only lay down certain rules, guidelines or sign post but ultimately the bigger responsibility as the custodian of the depositors' money and having an accountability to both the depositor and shareholders, banks will have to necessary focus on improving their governance and compliance culture," Das said. The RBI would soon issue draft guidelines on corporate governance in public and private sector banks, he said. The governor said the RBI's endeavour has constantly been to improve the efficacy of its supervisory and regulatory functions, so that the resilience of the regulated financial entities can be enhanced. Speaking about NBFCs, he said that credit flow to small NBFCs have improved over the last one year. The asset-liability management (ALM) position and other relevant aspects of top 50 NBFCs are being closely monitored, which covers all NBFCs with asset size above Rs 5,000 crore. "The ALM of top 51-100 NBFCs is also being examined by the respective regional offices of the Reserve Bank," he said. Das said besides structural changes, digital disruptions will continue to transform the banking sector. Initiatives undertaken by the government, the RBI and the industry have led to a radical shift towards ubiquitous digitization, which has provided an impetus to adoption of technology, he said. HV MRMR

Slowing credit growth critical challenge for bank: RBI Guv

New Delhi, May 20 () Finance Minister Nirmala Sitharaman will hold a review meeting with CEOs of public sector banks (PSBs) on Friday to discuss various issues, including credit offtake, as part of efforts to prop up the coronavirus-hit economy, sources said. The meeting was earlier scheduled on May 11, but due to the stimulus package announcements, it was deferred, they added. The meeting, to be held via video-conferencing, will also take stock of interest rate transmission to borrowers by banks and progress on moratorium on loan repayments, the sources said. The RBI had on March 27 slashed the benchmark interest rate by a massive 75 basis points and also announced a three-month moratorium to be given by banks to provide relief to borrowers whose income has been hit due to the lockdown. Besides, CEOs of public sector financial institutions will also be present at the meeting. The meeting assumes significance in light of the over Rs 20 lakh crore comprehensive economic package announced for the economy reeling under the COVID-19 crisis. The Union Cabinet headed by Prime Minister Narendra Modi on Wednesday approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 per cent through the Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector hit hard by the coronavirus crisis. Earlier this month, RBI Governor Shaktikanta Das held a meeting with heads of both public and private sector banks to take stock of the economic situation and review implementation of various measures announced by the central bank. The deployment of excessive funds by banks under the reverse repo route may also come up for discussion on Friday, sources said. Besides, progress under the targeted long-term repo operations (TLTRO) for the NBFC sector and microfinance institutions (MFIs), and sanctions under the COVID-19 emergency credit line will also be reviewed. DP ABM ABM

FM to meet PSU bank chiefs on Friday, to review credit flow

New Delhi, May 10 () Finance Minister Nirmala Sitharaman will hold a review meeting with CEOs of public sector banks (PSBs) on Monday to discuss various issues, including credit offtake, as part of efforts to prop up the economy hit by the COVID-19 crisis. The meeting, to be held via video-conferencing, will also take stock of interest rate transmission to borrowers by banks and progress on moratorium on loan repayments, sources said. The RBI had on March 27 slashed the benchmark interest rate by a massive 75 basis points and also announced a three-month moratorium to be given by banks to provide relief to borrowers whose income has been hit due to the lockdown. Earlier this month, RBI Governor Shaktikanta Das held a meeting with heads of both public and private sector banks to take stock of the economic situation and review implementation of various measures announced by the central bank. The deployment of excessive funds by banks under the reverse repo route may also come up for discussion on Monday, sources said. Besides, progress under the targeted long-term repo operations (TLTRO) for the NBFC sector and micro finance institutions (MFIs), and sanctions under the COVID-19 emergency credit line will also be reviewed. Under the emergency credit line, borrowers can avail a maximum of 10 per cent of the existing fund based working capital limits, subject to a cap of Rs 200 crore. Public sector banks have sanctioned loans worth Rs 42,000 crore to the MSME sector and corporates since the start of the lockdown. The finance minister had on Thursday said as many as 3.2 crore borrowers have taken advantage of the three-month moratorium scheme on repayment of loans announced by the Reserve Bank. "PSBs complemented RBI on loan moratorium. Their effective communication &amp; proactive actions ensured that over 3.2 cr. a/c availed 3-month moratorium. Quick query redressals allayed customer concerns. Ensuring responsible banking amid #lockdown," she had tweeted. Sitharaman also said state-owned banks have sanctioned loans worth Rs 5.66 lakh crore to borrowers during March and April, and disbursement will start soon after the lockdown is lifted. She said the banks sanctioned loans worth Rs 77,383 crore between March 1 and May 4 to provide sustained credit flow to non-banking finance companies (NBFCs) and housing finance companies. Besides, under TLTROs, total financing of Rs 1.08 lakh crore was extended, "ensuring business stability and continuity going forward", she had said. Meanwhile, MFI association Sa-Dhan, in a communication to the finance minister, said the sector expects to lend close to Rs 50,000 crore over the next six months, mostly by way of emergency or top-up loans to existing borrowers. However, it expressed concern that there is a possibility of shortfall of collections of over 30-40 per cent by September and a potential default by MFIs to their lenders to the extent of 10 per cent. There is likely to be a surge in demand from microfinance borrowers, given they urgently need credit to rebuild their lives and stabilise their incomes. However, field collections will be affected given the negative impact of the COVID-19 crisis on clients' incomes as well as uncertainty in operations post lockdown in many districts, Sa-Dhan said. Many of the mid and small MFIs will struggle to meet their operational expenses in full, with a potential shortfall of Rs 1,500-2,000 crore. The industry employs close to two lakh urban and rural youths, and sustaining their jobs is also an obligation for the sector, it added. DP ABMABM

FM to meet PSU bank chiefs on Monday; to review credit flow

Mumbai, Mar 1 () Bank credit growth declined to 8.5 per cent in January from 13.5 per cent in the year-ago period led by a sharp slowdown in loans to the services sector, according to RBI data. Growth in advances to the services sector decelerated to 8.9 per cent from 23.9 per cent in January 2019. Bank loan growth to non-banking financial companies (NBFCs) slowed to 32.2 per cent in the reporting month from a growth of 48.3 per cent a year-ago. During the month, personal loans segment grew by 16.9 per cent. Within personal loans, credit to housing segment grew by 17.5 per cent from 18.4 per cent, while education loan showed a negative growth of 3.1 per cent as against a negative growth of 2.3 per cent in January 2019, RBI data showed. Advances growth to agriculture and allied activities contracted to 6.5 per cent from 7.6 per cent rise last year. Credit growth to industry decelerated to 2.5 per cent from 5.2 per cent. Within industry, loan growth to paper and paper products, rubber plastic and their products and construction accelerated. "However, credit growth to textile, food processing, chemical &amp; chemical products, basic metal &amp; metal products, all engineering and infrastructure decelerated," RBI said. According to the latest quarterly statistics on deposits and credit of banks, bank loan growth decelerated to 7.4 per cent in the October-December, 2019 from 12.9 per cent the year-ago quarter. During the quarter, loans by public sector banks grew by 3.7 per cent while credit from private sector banks saw a growth of 13.1 per cent. In the fortnight ended February 14, 2020, bank credit grew by 6.3 per cent to Rs 100.41 lakh crore, from Rs 94.403 lakh crore in the year-ago fortnight. Deposits grew by 9.2 per cent to Rs 132.35 lakh crore in the fortnight compared to Rs 121.19 lakh crore, the RBI data showed. In February, the Reserve Bank Governor Shaktikanta Das had said that slowing credit growth is the biggest challenge the banking industry is facing. "The most critical challenge today for banks, not just in India but also elsewhere, is slowing credit off-take. It affects the profitability of banks," Das said a media event. Rating agency Crisil, in a recent note, said credit growth is likely to be around 6 per cent in this fiscal but is expected to accelerate to 8-9 per cent in FY21. "Prolonged slowdown in bank lending may be bottoming out this fiscal, with gross credit off-take set to rise 8-9 per cent on-year in FY21, a good 200-300 basis points (bps) over the likely growth of near 6 per cent this fiscal," Crisil said. This uptick in loan growth would be driven by a gradual pick-up in economic activity, continuing demand for retail loans, and strong growth in lending by private sector banks, it said. The country's GDP grew at 4.7 per cent in the December quarter, its slowest rate in more than six years. HV DRRDRR

Bank credit growth dips to 8.5 pc in January: RBI data

<ul><li><keyword id="1402930" type="General" weightage="50" keywordseo="state-discom" source="Orion">State discom</keyword> legacy dues to <keyword id="3278843" type="General" weightage="80" keywordseo="gencos" source="Orion">gencos</keyword> have more than halved from ₹1.38 lakh crore last June last year to ₹61,000 crore as of 24 July 2023.</li><li>This was due to the introduction of a late payment scheme which penalizes discoms for delaying payments.</li><li><keyword id="14181100" type="General" weightage="50" keywordseo="green-energy-open-access-rules" source="Orion">Green Energy Open Access Rules</keyword> also reduced the minimum offtake threshold for consumers.</li><li>Commercial &amp; industrial consumers can also demand green power from state discoms voluntarily. </li></ul>India’s green power generators have been gaining from increased payment discipline amongst state distribution companies or discoms after the government introduced late payment surcharge scheme (LPS) last year. That’s good news for renewable power generators like Greenko, ReNew, <keyword id="45417" type="General" weightage="50" keywordseo="adani-power" source="Orion">Adani Power</keyword> and more who will now be assured of faster payments. The scheme has made good progress with payment discipline amongst state distribution companies as state discom legacy dues to gencos have more than halved from ₹1.38 lakh crore in June last year to ₹61,000 crore as of 24 July 2023, says a report by CreditSights. Also, Power Finance Corporation (PFC) and <keyword id="64468" type="General" weightage="50" keywordseo="rural-electrification-corporation" source="Orion">Rural Electrification Corporation</keyword> (REC) have been funding various state governments to help clear these dues. In the last one year, both these public sector companies (PSUs) have given multibagger returns to their investors — at 162% and 154% respectively. Most power generators with a renewable energy portfolio have also been gaining ground. What’s the scheme? As per the scheme, state discoms who delay their payments beyond the default trigger date, will lose short-term power access. Apart from that, progressively these restrictions would increase each month for medium and long-term power access as well for each month of non-payment. The scheme is a game changer for the renewable power generators who are stuck with large capex costs along with delayed payments. “It (the scheme) reduced the counterparty credit risks posed by the state discoms. Not only would the state discoms have to clear their sizable backlog of owed dues to the gencos, they would also be more disincentivized to delay payments to the gencos given the punitive penalties,” said the CreditSights report. Gencos who are able to receive timely payments can improve their account receivables, working capital positions and cash flows. “Investor sentiment in the sector has also improved materially post the LPS scheme, based on our discussions with market participants,” CreditSights observed. More green consumers In the Union Budget 21-22, eligible Indian states were granted additional borrowing limits of 0.25% - 0.5% of annual Gross State Domestic Product (GSDP). This was applicable over a four-year period from FY22-FY25. Some of these benefits have flowed to the state discoms. Till date, ₹66,400 crore of additional borrowing permissions have been granted to the states — for financial support to the state discoms, the report said. The government also came up with Green Energy Open Access Rules in June last year, which helped improve offtake of renewable power. It reduced the renewable energy minimum offtake threshold of consumers from 1 MW to 100 kW. It also allows commercial &amp; industrial consumers to demand green power on a voluntary basis from state discoms. It also provided clarity on final tariffs charged to consumers of renewable energy, bringing in more transparency into the system. These new rules will drive better transparency, access and stronger demand for renewable energy across the smaller C&amp;I customers, CreditSights opines. The Indian government has set an ambitious target to convert 40% of total installed power capacity green by 2030. That means India would have to add 250 GW of renewable energy capacity between 2023-2027 – and it has been working actively to clear bottlenecks along the way, most of which is ensuring these green power producers are paid on time.

You Searched For "credit offtake" and got 13 results

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FM to meet PSU bank chiefs on Friday, to review credit flow

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FM to meet PSU bank chiefs on Monday; to review credit flow

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Bank credit growth dips to 8.5 pc in January: RBI data

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Indian green power generators are gaining from more takers & timely payments

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