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The Indian <keyword id="22196321" type="General" weightage="20" keywordseo="credit-card-industry" source="keywords">credit card industry</keyword> is struggling to grow, as new issues slow down on a year-on-year (YoY) basis. Not only has the growth i.e. issuance of new credit cards slowed down, but lenders are also becoming increasingly cautious of the asset qualities, a recent report by Nomura showed. From 19% in July 2024, the growth in the <keyword id="6368202" type="General" weightage="20" keywordseo="credit-card" source="Orion">credit card</keyword> spendings came down to 13% in August 2024. The year-to-date (YTD) growth has also significantly declined in FY25, currently standing at 17%, markedly down from 28% in FY24. For the fifth consecutive month, the number of new credit cards added to the system remained well below the 1-million, or 10 lakh mark. Around 9.2 lakh credit cards were added during the month, a slight uptick from the 7.55 lakh cards that came into the system In July 2024. However, there is growth in this space nevertheless, with about 10.55 crore active credit cards at present, marking a 15.6% YoY increase. Even the annualised spend per card, or the average amount spent via an annual card during an year grew 1% YoY to Rs 1.87 lakh. But this was far less than the 7% growth annual spends via one credit card saw in FY24. Meanwhile, what continues to burgeon consistently is the outstanding amount on these credit cards, which ballooned to Rs 2.7 lakh crore in June 2024, up from Rs 2.6 lakh crore in March 2024, and around Rs 2 lakh crore in the year ago period. To put this in perspective, pre-pandemic, the total outstanding amount stood at Rs 87,686 crore, which marks a 24% CAGR in this amount, in just a span of 5 years. <h2>Large drops, slowdown to sustain</h2>Even the monthly expenditure per card dropped 2% YoY to Rs 16,000 in August, 2024. Subsequently, the transaction volume via credit cards also dipped to 1.6% in August, along with the total amount of <keyword id="21084888" type="General" weightage="100" keywordseo="credit-card-spending" source="keywords">credit card spending</keyword>, which fell to Rs 1.69 lakh crore in August, from Rs 1.73 lakh crore in July. Also, there has been a hefty cutdown in provisions made for credit card reward points, which reflects in the quantum of credit card benefits that have been mowed out by companies of late, making credit cards far less lucrative than before. <h2>HDFC takes lead </h2>During August 2024, <keyword id="19895995" type="General" weightage="20" keywordseo="HDFC-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="HDFC Bank" meta.hostid="261" meta.entityid="HDFC Bank">HDFC bank</keyword> added a total of 2.41 lakh credit cards, taking its total tally of active credit cards to 2.19 crore. <keyword id="19900482" type="General" weightage="20" keywordseo="ICICI-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="ICICI Bank" meta.hostid="261" meta.entityid="ICICI Bank">ICICI Bank</keyword> came a second distant, adding 1.45 lakh credit cards during the month, which means that the second-largest credit card issuer now holds over 1.75 crore active credit cards. Axis Bank and SBI Cards also added 1.27 lakh and 1.1 lakh cards, respectively to their repertoire during the month, while the growth numbers at Kotak Mahindra Bank remained largely flat, stagnating the bank's total card tally at 54.13 lakh. This was due to the ongoing ban on the bank due to its weak IT infrastructural issues imposed by RBI in April 2024. If anything, the bank's number of credit cards declined by 61,191 during the month. Even as the festive season approaches, experts think that it is unlikely to make a major dent in credit card spendings, which are expected to see a further slowdown in the quarters to come.

Credit card growth experiencing a slowdown, as borrowers struggle to pay back loans

India's corporate credit landscape is showing positive trends that are expected to persist, according to a recent report by <keyword id="19990557" type="General" weightage="20" keywordseo="SP-Global" source="keywords" meta.keywordsubtype="org" meta.entityname="S&amp;P Global" meta.hostid="261" meta.entityid="S&amp;P Global">S&amp;P Global</keyword>. The report highlights strengthening credit quality across various sectors, driven by enhanced <keyword id="20994126" type="General" weightage="20" keywordseo="financial-discipline" source="keywords">financial discipline</keyword>, broad-based <keyword id="19899597" type="General" weightage="20" keywordseo="earnings-growth" source="keywords">earnings growth</keyword>, and robust liquidity profiles. S&amp;P Global's analysis reveals that one in three ratings within India now shows a positive outlook, marking a significant shift after three years of net positive rating actions. The report indicates that corporate India has built greater resilience against downside risks, reflecting a more stable and robust credit environment. However, corporate leverage in India is expected to decline marginally, even as capital expenditure (capex) rises by 30% compared to pre-pandemic levels. This improvement is attributed to more entrenched financial discipline among companies, which have managed to balance rising capex with prudent financial management. The report forecasts a 10% growth in aggregate EBITDA in 2024, driven by strong performance in sectors such as telecommunications, airports, commodities, and chemicals. This broad-based earnings growth underscores the resilience of corporate India and its ability to generate substantial cash flows despite a challenging global environment. Indian companies are benefiting from strong onshore liquidity and the absence of large debt maturities, which support their liquidity profiles. The resilience of these companies to foreign exchange and interest rate volatility further strengthens their liquidity positions. Corporate India's positive credit trends are closely linked to broader economic drivers such as GDP growth. Increased consumer spending is bolstering sectors like airports, automobiles, and telecommunications. Meanwhile, infrastructure investment is significantly boosting the commodities, utilities, and commercial automotive sectors. S&amp;P Global notes that both infrastructure and non-infrastructure sectors are experiencing reductions in leverage, with absolute debt reduction more pronounced in non-infrastructure sectors. However, infrastructure entities are slower in reducing debt due to higher capex, particularly in energy transition initiatives. Operating cash flows across sectors are outpacing capex, supporting further deleveraging. While capex intensity remains higher in infrastructure sectors, the neutral free operating cash flow is seen as a positive trend, indicating that companies are managing their capital expenditures efficiently while maintaining cash flows. The transportation infrastructure sector is benefiting from traffic growth and tariff increases, with rising cargo volumes supporting port revenues and improved operating efficiencies boosting margins. Airports are also experiencing higher traffic levels and tariff increases, contributing to better operating cash flows and overall credit quality. In the utilities sector, rising demand and new capacity are driving earnings growth, though capex remains high, particularly for energy transition projects. The steel sector is expected to see increased operating cash flow due to falling input prices and new capacity additions. Earnings in the oil and gas sector are expected to remain stable, supported by a favorable price outlook and consistent production levels. The telecom sector is also on a path to significant deleveraging, with capex expected to moderate following the 5G auctions in 2023. The auto sector is witnessing sustained operating performance as volumes stabilize after the supply chain disruptions of 2022. S&amp;P Global notes that debt levels in the auto sector are expected to remain low following sharp deleveraging, while normalized growth in auto sales and stable margins support the sector's positive outlook. In the chemicals sector, falling input costs and stabilized product prices are expected to drive earnings recovery following a downturn in 2023. Improved signals show a broader trend of recovery across various industrial sectors in India. S&amp;P Global concludes that with the highest proportion of positive credit outlooks in the region, India's corporate sector is well-positioned for continued <keyword id="22758432" type="General" weightage="20" keywordseo="credit-quality-improvement" source="keywords">credit quality improvement</keyword>. SEE ALSO:<a href="https://www.businessinsider.in/stock-market/webstories/saraswati-saree-depot-ipo-price-band-to-risk-factors-all-you-need-to-know/slidelist/112457330.cms" target="_blank"></a> <a href="https://www.businessinsider.in/stock-market/webstories/saraswati-saree-depot-ipo-price-band-to-risk-factors-all-you-need-to-know/slidelist/112457330.cms" target="_blank">Saraswati Saree Depot IPO – Price band to risk factors, all you need to know</a><a href="https://www.businessinsider.in/tech/news/indias-wearables-market-decline-for-the-first-time-as-smartwatch-shipments-fall/articleshow/112397246.cms" target="_blank"></a> <a href="https://www.businessinsider.in/tech/news/indias-wearables-market-decline-for-the-first-time-as-smartwatch-shipments-fall/articleshow/112397246.cms" target="_blank">India’s wearables market decline for the first time as smartwatch shipments fall</a><a href="https://www.businessinsider.in/business/news/ola-wants-to-re-enter-the-quick-commerce-business-to-take-on-blinkit-and-swiggy-instamart/articleshow/112364583.cms" target="_blank"></a> <a href="https://www.businessinsider.in/business/news/ola-wants-to-re-enter-the-quick-commerce-business-to-take-on-blinkit-and-swiggy-instamart/articleshow/112364583.cms" target="_blank">Ola wants to re-enter the quick commerce business to take on Blinkit and Swiggy Instamart</a>

India's corporate credit quality is getting stronger: S&P Global

We all know the pressure of meeting deadlines, but what if we told you that being late doesn’t just affect your calendar — it could actually tarnish how people see the quality of your <keyword id="6355058" type="General" weightage="20" keywordseo="Work" source="Orion">work</keyword>? According to researchers, that’s exactly the case. They found that work submitted late is seen as lower in quality than the same work submitted on time or early, no matter how great it actually is. It turns out, missing a deadline can make you and your work seem less competent and trustworthy, all because of the subtle judgments deadlines trigger in other people. <h2>The deadly deadline dilemma</h2>Previous studies have focused on how deadlines affect employees’ productivity and stress levels, but lead researcher Sam Maglio’s team wanted to know how missing a deadline changes an outsider’s perception. To test this, the researchers conducted 18 different experiments with thousands of people, from managers and HR professionals to everyday folks, evaluating a wide range of creative and professional work. In the test, participants saw the same exact work samples — like photography, product pitches, news articles, and art — but they were told it was submitted either early, on time, or late. And guess what? The late submissions were consistently rated as lower quality, despite being identical to those submitted on time. <div type="Article" hostid="261" msid="114883482" title="We heard from over 750 people who have recently struggled to find work. Here are their biggest frustrations with getting hired." mstype="2" mssubtype="0"></div>Maglio explains, “Everyone saw the exact same art contest entry, school submission, or business proposal, but they couldn’t help but use their knowledge of when it came in to guide their evaluation of how good it was.” In other words, once people knew something was late, it was hard not to think less of it. <h2>Early birds don’t really get extra credit, but late birds do lose points</h2>Interestingly, turning in work early didn’t seem to earn extra praise. Evaluators ranked work that came in early and on time as equally good, which means there’s no major boost for those overachievers who submit work ahead of the deadline. But the real problem comes if you’re late — even by a little. In fact, it didn’t matter if the work was one day or one week late; the hit to quality ratings was the same. Late submissions were rated as poorly as work that objectively missed the mark, like not meeting word counts. And it turns out that advance warning doesn’t do much to soften the blow — one missed deadline still chipped away at the evaluator’s view of the employee’s competence and integrity, even if they were usually punctual. But here’s where it gets even trickier: evaluators didn’t just judge the work as poorer in quality — they also saw the latecomer as less reliable and were less likely to consider them for future tasks. One missed deadline could, in theory, limit your future opportunities to shine or earn promotions. <div type="Article" hostid="261" msid="114915871" title="I did a remote internship while also side hustling at a national park. I worked all day but lived in a beautiful place." mstype="2" mssubtype="0"></div>The researchers even tested this with high school students in China, who were shown art entries with the submission dates marked as either early, on time, or late. Even though they were told to ignore everything except the artwork itself, the “late” pieces received lower grades. And that’s with peers evaluating peers, so it didn’t matter if a boss or manager had set the deadline — missing it still left a mark. <h2>Let your manager know!</h2>Luckily, not all hope is lost for late submitters. Maglio’s team found that the reason behind a missed deadline actually mattered. If the delay was due to uncontrollable events — like jury duty or a medical emergency — people cut the submitter more slack. The same was true if the deadline was a “soft” one rather than a hard cutoff, or if the work wasn’t particularly critical. “Communication around deadlines is vital. If it’s a hard, and not a soft, deadline, you as the manager should let your employees know,” Maglio explained. “If the reason why you missed the deadline was beyond your control, you as the employee should let your manager know.” The findings of this study have been published in Organizational Behavior and Human Decision Processes and can be accessed <a href="https://dx.doi.org/10.1016/j.obhdp.2024.104365">here</a>.

Missed a deadline? Here’s why it might cost you more than just a little extra time

Amid the severe pollution gripping the national capital, <keyword id="19948557" type="General" weightage="20" keywordseo="delhi-metro" source="keywords">Delhi Metro</keyword> recorded its highest-ever daily ridership on November 18, with a staggering 78.67 lakh passenger journeys, according to official data. This figure exceeded the previous high of 77.49 lakh passengers on August 20 of this year, the data said. On November 18, the Yellow Line, which connects Millennium City Centre in Gurugram to Samaypur Badli in Delhi, saw the highest passenger traffic, with a record 20.99 lakh commuters. The Blue Line followed closely with 20.80 lakh passengers, while the Red Line recorded 8.56 lakh commuters, 8.15 lakh in Pink Line and 7.93 lakh in Violet Line. The Magenta Line saw 6.19 lakh passengers, followed by the Green Line with 4.12 lakh commuters, 81,985 in Airport Line, 57,701 in Rapid Metro, and 50,128, in the Grey Line, as per the data. Thick grey haze continued to choke Delhi for the third consecutive day on Tuesday, with pollution levels remaining alarmingly high at 488 in the 'severe plus' category. To encourage more people to use the metro in this scenario, the Delhi Metro Rail Corporation (DMRC) is running 60 extra trips on weekdays, offering more capacity than usual, an official statement said. The DMRC has recorded its 25 highest passenger journeys since August this year, the statement added. It emphasised that the more people opt for the metro over private vehicles, the greater the reduction in vehicular emissions, which will help improve the air quality of the city and its surrounding areas. In addition, the DMRC has introduced several measures to make travel more convenient for passengers, the statement read. These include the ability to book single or multiple journey tickets through various digital platforms, allowing passengers to plan their journeys anytime and anywhere without the need to stand in queues at the station. Furthermore, partnerships with organisations such as IRCTC, NCRTC, ITPO, and others have made it easier for people to not only travel by metro but also access interconnected travel options, along with various offers and events, all with seamless ease, the statement said. The DMRC also stated that it is one of the most <keyword id="24050954" type="General" weightage="20" keywordseo="environmentally-friendly-transport" source="keywords">environmentally friendly transport</keyword> options and the first metro system in the world to be registered for carbon credits with the United Nations for its environmental measures.

Severe pollution pushes Delhi Metro to record its highest-ever daily ridership on November 18

If you're looking for some inspiration on how to spend the upcoming holiday season, it's time to take cues from fellow Indians. A recent study by American Express has highlighted that a staggering 97% of Indians have their travel plans set for the forthcoming festive season, and more than 30% have already made their bookings. What's more, around 93% won't shy away from spending a few extra bucks if it means making their trip more comfortable and fun. A recent <keyword id="23687478" type="General" weightage="20" keywordseo="Skyscanner-report" source="keywords">Skyscanner report</keyword> titled Travel Trends 2025 also underlined this growing preference for <keyword id="23687479" type="General" weightage="20" keywordseo="comfortable-travel" source="keywords">comfortable travel</keyword> among Indians. Per the report, 57% of Indians were okay spending a little extra to get a good quality in-flight meal. For 47%, good seats and hence, seat selection was a priority, and 42% of surveyed Indians preferred comfort right from the trip's start-valuing access to airport lounges. Per the <keyword id="23687477" type="General" weightage="20" keywordseo="American-Express-study" source="keywords">American Express study</keyword>, while most people (63%) just want to let their hair down and relax, 54% want to don their explorer hats and see new places. About 27% just want to get away from the chaos of their daily lives and spend time with their near and dear ones. Most of us (around 88%) just have Bharat Darshan on our itinerary, while 61% felt like the world was calling us, which is why they plan to travel internationally. Irrespective of destinations, a staggering 91% of Indian travelers believe holidays can help build resilience and strength, so they’re better able to handle the stresses of everyday life. But even amidst all this traveling, Indians do not forget to be budget-conscious, which explains why 73% of Indians won't shy away from generously using their <keyword id="23687480" type="General" weightage="20" keywordseo="credit-card-points" source="keywords">credit card points</keyword>, <keyword id="23687481" type="General" weightage="20" keywordseo="airline-miles" source="keywords">airline miles</keyword>, or loyalty rewards. Soak in the festivities and experience The American Express study, which spanned Australia, Canada, France, Germany, Hong Kong, Italy, Japan, Mexico, Singapore, Spain, the United Kingdom, and the United States, apart from India, only reinforced that pretty much everyone across the world is in a mood to travel and relax. Globally, 58% of respondents from these countries had plans to visit their family and friends. For those few who had no travel plans but rather wanted to lounge and laze in their homes, 40% had family or friends visiting them. But quality time with loved ones was not the only thing on the list, with 55% also taking trips outside of visiting family. Also, buying gifts during the season is seemingly passe. Every 1 in 3 respondents chose gifting their loved ones an experience rather than a material gift. Atop this gift list are entertainment-related experiences, preferred by 59% of respondents. Travel-related experiences come next, chosen by 54% of those surveyed, followed by food and drink-related experiences, which were opted for by 49% of respondents. The Skyscanner also highlighted that 66% of Indian travelers plan to travel more in 2025. As to the deciding factors for choosing the next travel destination, food, culture, and weather played a crucial role for 63%, 58%, and 57% of respondents, respectively. Skyscanner's report also highlighted this trend, noting that people were increasingly looking forward to having unique experiences. 53% of Indians surveyed wanted to travel to watch a live game or sporting event in 2025. At 54%, this number was slightly higher amongst the 25-34 age cohort.

Travel, Eat, and Have Fun: How Indians plan to spend their holidays

New Delhi, <keyword id="19955699" type="General" weightage="20" keywordseo="crisil-ratings" source="keywords">Crisil Ratings</keyword> on Monday said the credit quality outlook for Indian corporates remains positive for the April-September period of the 2024-25 fiscal year with upgrades continuing to outpace downgrades. In the last fiscal year, <keyword id="19898320" type="General" weightage="20" keywordseo="crisil" source="keywords">Crisil</keyword> gave 409 rating upgrades and 228 downgrades. Some export-linked sectors, such as textile and seafood, saw a higher downgrade rate due to subdued global demand or high-cost inventory that impacted profitability. "India Inc's credit quality outlook is positive for the first half of fiscal 2025 with upgrades expected to outnumber downgrades. Multiplier effect of government capex will continue to drive infrastructure and linked sectors. Healthy balance sheets will continue to support the credit quality outlook, with capex funding seen prudent," <keyword id="21152659" type="General" weightage="20" keywordseo="crisil-rating" source="keywords">Crisil Rating</keyword> said. It said the outstanding bank credit is expected to cross Rs 200 lakh crore by March 2025, from Rs 172 lakh crore a year ago, even though there would be moderation in the rate of credit growth. The Indian economy with a GDP growth of 6.8 per cent is expected to remain the fastest-growing large economy in the current fiscal. The growth will, however, moderate from 7.6 per cent expected in 2023-24 as high interest rates and lower fiscal impulse to growth will temper demand, according to Crisil. Crisil Ratings Managing Director <keyword id="20983741" type="General" weightage="20" keywordseo="gurpreet-chhatwal" source="keywords">Gurpreet Chhatwal</keyword> said the three key pillars of India Inc's credit quality -- deleveraged balance sheets, sustained domestic demand and government-led capex -- kept the upgrade rate elevated in the second half of FY24. "With balance sheets in most sectors at their healthiest, capacity utilisation around peak levels and expected interest rate cuts, a broad-based pick-up in private capex is finally in sight," Chhatwal said, adding that sectors with export linkages could have some uncertainties around them. Stating that bank credit outstanding could cross Rs 200 lakh crore by March 2025, credit growth will remain healthy, albeit a tad lower at 14 per cent this fiscal year. Credit growth was 16 per cent in the last fiscal year that ended on March 31. Overall gross non-performing assets (NPAs) will continue to trend down and touch fresh decadal lows, it said. Crisil Ratings Senior Director and Chief Ratings Officer <keyword id="21152658" type="General" weightage="20" keywordseo="krishnan-sitaraman" source="keywords">Krishnan Sitaraman</keyword> said there is a likelihood of interest rate cuts globally in 2024. "We expect the RBI to cut interest rates in the second half of the current fiscal," Sitaraman said, adding that credit quality is likely to remain positive. The RBI is scheduled to announce its first monetary policy review for the current fiscal on April 5. For FY25, as many as 21 of 26 corporate sectors have strong to favourable credit quality outlook, marked by robust balance sheets and healthy operating cash flows -- expected to be as much, or higher, than in fiscal 2024. These include auto-component manufacturers, companies in the hospitality and education sectors where the credit quality is supported by healthy domestic demand. It also includes sectors benefiting from the government's infrastructure spending, such as construction companies, and steel, cement and capital goods manufacturers. Four corporate sectors -- specialty chemicals, agrochemicals, textile cotton spinning and diamond polishers -- are facing headwinds given their fortunes are aligned with global macroeconomic conditions, which are subdued at present.

Credit quality outlook of India Inc positive in first half of FY25: Crisil Ratings

Union Minister <keyword id="19897455" type="General" weightage="20" keywordseo="Nitin-Gadkari" source="keywords">Nitin Gadkari</keyword> has said that <keyword id="22181136" type="General" weightage="20" keywordseo="highway-agencies" source="keywords">highway agencies</keyword> should not charge tolls if <keyword id="20028505" type="General" weightage="20" keywordseo="roads" source="keywords">roads</keyword> are not in good condition. Gadkari was speaking at a global workshop on satellite-based tolling, set to be implemented over 5,000 km this financial year. "If you don't provide good quality service, you should not charge <keyword id="20071846" type="General" weightage="20" keywordseo="toll" source="keywords">toll</keyword>... We are in a hurry to start tolling to collect <keyword id="20085256" type="General" weightage="20" keywordseo="user-fee" source="keywords">user fee</keyword>s and protect our interest," the road transport and highways minister said. "You should collect the user fee where you provide the best <keyword id="22190322" type="General" weightage="20" keywordseo="quality-road" source="keywords">quality road</keyword>. If you collect toll on roads with potholes, mud, then there will be a backlash from people," he added. State-owned <keyword id="20198815" type="General" weightage="20" keywordseo="NHAI" source="keywords" meta.keywordsubtype="org" meta.entityname="NHAI" meta.hostid="261" meta.entityid="NHAI">NHAI</keyword> plans to implement (Global Navigation Satellite System) <keyword id="21980580" type="General" weightage="20" keywordseo="GNSS-based-Electronic-Toll-Collection" source="keywords">GNSS-based Electronic Toll Collection</keyword> (ETC) system within the existing <keyword id="22190323" type="General" weightage="20" keywordseo="FASTag-ecosystem" source="keywords">FASTag ecosystem</keyword>, initially using a hybrid model where both (Radio Frequency Identification) RFID-based ETC and GNSS-based ETC will operate simultaneously. NHAI proposes to roll this out on commercial vehicles initially then private vehicles, considering scalability and privacy concerns. The highway authority has also recommended driver behaviour analysis and back-end data analysis for fraud detection. "With GNSS, the payment modes might be converted from prepaid to postpaid. Banks and financial institutions might be able to provide faster credits based on travel plans," NHAI has recommended.

Highway agencies should not charge toll if roads are not in good condition: Highway Minister Nitin Gadkari

The bad assets or gross <keyword id="19964545" type="General" weightage="20" keywordseo="NPAs" source="keywords">NPAs</keyword> of commercial <keyword id="19934118" type="General" weightage="20" keywordseo="banks" source="keywords">banks</keyword> fell to a 12-year low of 2.8% in March 2024 and may go down further to 2.5% by the end of the current fiscal, said the <keyword id="19899808" type="General" weightage="100" keywordseo="RBI" source="keywords" meta.keywordsubtype="org" meta.entityname="RBI" meta.hostid="269" meta.entityid="RBI">RBI</keyword>'s <keyword id="678734" type="General" weightage="20" keywordseo="Financial-Stability-Report" source="Orion">Financial Stability Report</keyword> (FSR) released on Thursday. <keyword id="19982351" type="General" weightage="20" keywordseo="Scheduled-Commercial-Banks" source="keywords" meta.keywordsubtype="org" meta.entityname="Scheduled Commercial Banks" meta.hostid="269" meta.entityid="Scheduled Commercial Banks">Scheduled Commercial Banks</keyword>' (SCBs) gross <keyword id="6401657" type="General" weightage="20" keywordseo="non-performing-assets" source="Orion">non-performing assets</keyword> (<keyword id="19982350" type="General" weightage="20" keywordseo="GNPA" source="keywords">GNPA</keyword>) ratio fell to 2.8%, and the net non-performing assets (NNPA) ratio to 0.6% at the end of March 2024. "The asset quality of SCBs recorded sustained improvement, and their GNPA ratio moderated to a 12-year low in March 2024. Their NNPA ratio too improved to a record low," said the June FSR. Among bank groups, public sector banks (<keyword id="20012926" type="General" weightage="20" keywordseo="PSBs" source="keywords">PSBs</keyword>) recorded a substantial reduction (76 bps) in their GNPA ratio during H2 2023-24. While the GNPA stock decreased across all bank groups, active and deep provisioning by PSBs and foreign banks (FBs) resulted in an improved provisioning coverage ratio (PCR) in March 2024, the report said. The half-yearly slippage ratio (viz, new NPA accretions as a share of standard advances) decreased across bank groups. Though the amount of write-offs declined during the year, the write-off ratio remained almost at the same level a year ago due to a reduction in GNPA stock, the FSR said. Overall, it added the sustained reduction in the GNPA ratio since March 2020 has been primarily due to a persistent fall in new NPA accretions and increased write-offs. The RBI said macro stress tests are performed to assess the resilience of SCBs' balance sheets to unforeseen shocks emanating from the macroeconomic environment. These tests attempt to assess capital ratios over a one-year horizon under a baseline and two adverse (medium and severe) scenarios. "The GNPA ratio of all SCBs may improve to 2.5% by March 2025 under the baseline scenario," the report said. However, if the macroeconomic environment worsens to a severe stress scenario, the ratio may rise to 3.4%. Under the severe stress scenario, the GNPA ratios of PSBs may increase from 3.7% in March 2024 to 4.1% in March 2025, whereas it may go up from 1.8% to 2.8% for private sector banks and from 1.2% to 1.3% for FBs. The <keyword id="20089808" type="General" weightage="20" keywordseo="financial-stability" source="keywords">Financial Stability</keyword> Report reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on the resilience of the Indian financial system and risks to financial stability. The report further said deposit mobilisation by SCBs gathered pace during 2023-24, with a large portion of new accretions in the form of term deposits. "Interest rates became more attractive as banks stepped up efforts to mobilise funds to match the rapid rise in credit demand. Growth in current account and savings account (CASA) accelerated across all bank groups," the RBI said. According to the report, bank credit accelerated during H2 2023-24 among public sector banks (PSBs) and foreign banks (FBs), whereas it moderated in respect of private sector banks (PVBs). The share of credit to the services sector and personal loans in the aggregate loan portfolio increased. Personal loans accounted for over half of PVBs' <keyword id="19998083" type="General" weightage="20" keywordseo="credit-growth" source="keywords">credit growth</keyword>. The expansion in personal loans was broad-based, led by housing loans and followed by other personal loans.

Banks' gross NPAs at 12-yr low, may fall further to 2.5%: RBI report

<ul class="summary-list"><li>PIMCO says that private credit investors are not being compensated enough for market risks.</li><li>Excess premium is falling as capital flows into too few opportunities, the bond giant said.</li></ul>Credit returns aren't enough to justify the risks investors are currently taking on, PIMCO said in a <a target="_blank" href="https://www.pimco.com/eu/en/insights/navigating-public-and-private-credit-markets-liquidity-risk-and-return-potential#:~:text=Liquidity%20premiums%20have%20compressed%20in,Asset%20selection%20matters.">note</a> on Wednesday.According to the bond giant, borrowers need to offer higher compensation to lenders, given the market's rising vulnerability to today's macro-conditions.What's more, less-liquid private credit is not offering high enough premiums for borrowers that lock in their investments."The compensation for providing liquidity is declining across both public and private credit markets as more capital chases too few opportunities," CIO of core strategies Mohit Mittal explained. "New investments are entering at potentially unattractive valuations, with corporate spreads across public and private credit markets near record lows."For example, the excess premium received for investing in the private sector now stands below 100 basis points: that's not even half of what should be offered, PIMCO estimates.By commiting money in these assets, investors are possibly losing out on opportunities elsewhere, and exposing themselves to the potential cash shortfall, Mittal said.Meanwhile, some corners of private credit are susceptible to an increased macro uncertainty.Among smaller firms with floating-rate debt, a cooling economy or sustained interest rate highs are rising risks, PIMCO said. While markets are betting on rate cuts to <a target="_blank" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">start this September</a>, such projections have been delayed multiple times through 2024.In fact, PIMCO found that higher rates are eroding the private sector's ability to cover interest rate expenses:"40% of private credit borrowers (size weighted) are not producing enough cash flow to service all debt, taxes, and capital spending needs," it estimated. "If interest rates stay elevated for longer or economic growth slows, these borrowers would be more vulnerable to further increases in leverage, declining credit quality, and higher expected losses."<div type="image" title="Chart showing rise in private credit borrowers facing difficulty in covering interest payment expenses." height="1106" width="1776" msid="111642863" hostid="261" sizebytes="39108"></div>At the same time, corporate credit is heavily centered on vulnerable sectors, such as technology and health, PIMCO noted. These come with their own risks, such as exposure to an AI disruption.In these conditions, there's "tremendous value" in public credit of high-quality and liquidity, Mittal suggested.

Credit investments aren't worth the risk right now, says bond giant PIMCO

<ul><li>The hospitality sector saw 23 <keyword id="142429" type="General" weightage="20" keywordseo="credit-rating" source="Orion">credit rating</keyword> upgrades, with no downgrades at all in FY24, says ICRA.</li><li>Auto, financial sector, power, realty and transport infrastructure also saw several upgrades.</li><li>Agriculture, chemicals, construction and apparel sectors saw the most downgrades. </li></ul> The fiscal year of FY24 continued the ‘upgrade momentum’ that was set into motion in FY22, said the credit rating agency ICRA. Two entities had been upgraded for every entity downgraded during the year, the rating agency said in a report released on Monday. The biggest winner for the year is the hospitality sector — with 23 upgrades and an upgrade rate of 37%. And, there were no downgrades at all. ICRA maintains a positive outlook on the Hospitality sector for FY2025 as well. The other sectors which saw the most number of upgrades include auto and auto components, finance, power, realty and transport infrastructure. On the other hand, sectors which saw the most number of downgrades are — agricultural food and other products, chemicals and petrochemicals, construction, textiles and apparel. Company-specific factors While entities in aviation, hospitality, auto &amp; auto components, and banks gained from the industry tailwinds in FY24 – that’s not the only factor behind most upgrades. “A large majority of rating upgrades were driven by company-specific factors such as expansion in market share or order book, improvement in the cost structure, reduction in project risk, or fresh equity infusion that strengthened the balance sheet,” says K Ravichandran, chief rating officer at ICRA said. Overall, credit profiles continued to improve last year. The number of instances of defaults dipped to five in FY24, compared with 22 in FY23 and 42 in FY22. “Corporate India has shown a high resilience to withstanding the rise in borrowing costs over the past two years and is seen to have the capacity to bear the current level of interest rates before the rate cut cycle likely begins in the latter part of the year,” said Ravichandran. Banks &amp; NBFC asset profiles at decadal best The financial sector has also been one of the best-performing sectors for the year in terms of credit profile. It saw an upgrade rate of 13%, next only to auto. Its downgrade ratio is also low at 2%. “The asset quality of banks and NBFCs has also been at its decadal best with the profitability and the capitalisation indicators expected to remain healthy in the near term. The series of proactive actions taken by the regulators (RBI and SEBI) in recent years would work to further strengthen the financial system and the capital markets,” opines Ravichandran. He, however, added that the key downside factors that could derail progress in multiple sectors are the monsoons and complicated geopolitical landscape. Two wars, the Red Sea crisis and sluggish exports had been weighing on India in FY24. “Yet, these did not feel heavier as domestic consumption demand across several sectors, government spending on public infrastructure, and healthy balance sheets lent support to the credit profiles of entities,” says ICRA. In FY25, the rating agency expects India’s GDP to expand by 6.5%, with the average retail inflation estimated to be moderate at 4.6%.

Two entities upgraded for every downgrade in FY24, hospitality sector records 23 upgrades: ICRA

<ul class="summary-list"><li>Shadow banking tops commercial real estate as the most likely source of a credit event, according to a BofA survey.</li><li>Alarm has risen over private credit, given its rapid growth and loose oversight.</li></ul>Bank of America's latest Global Fund Managers survey found that shadow banking has surpassed commercial real estate as the likeliest culprit of a future credit event.Nearly a third of surveyed investors consider the opaque sector of the financial markets the most likely source of future fallout, overtaking the 24% who still see a bigger risk in the property market. In June's survey, commercial real estate held the top spot.<div type="image" title="Bank of America chart comparing likely source of a credit event" height="1352" width="2164" msid="111840550" hostid="261" sizebytes="67136"></div><a target="_blank" href="https://www.businessinsider.com/private-credit-lenders-middle-market-deals-2023-11">Shadow banking</a> refers to a group of lenders outside of the traditional banking system and which are often less regulated. Worries have risen in recent years over <a target="_blank" href="https://www.businessinsider.com/banks-shadow-lenders-1-trillion-fed-private-credit-hedge-funds-2024-2">unforeseen systemic risks.</a>Outside the purview of regulators, this area of the credit market has ballooned. According to the IMF, it notched <a target="_blank" href="https://markets.businessinsider.com/news/funds/private-credit-risk-leverage-debt-interest-rates-imf-financial-stability-2024-4">$2.1 in assets and capital last year</a>. But while its high returns have attracted investors, the space is dominated by opaque credit quality and infrequent valuations, analysts wrote in April.Top Wall Street commentators have also bashed shadow banking. JPMorgan chief Jamie Dimon went on the offensive last May, warning of bad actors in the industry."There could be hell to pay," he <a target="_blank" href="https://www.businessinsider.com/jamie-dimon-private-credit-market-risks-retail-investors-debt-investing-2024-5#:~:text=%22There%20could%20be%20hell%20to,expect%20there%20to%20be%20problems.%22">then said</a>. "I've seen a couple of these deals that were rated by a rating agency and, I have to confess, it shocked me what they got rated."Meanwhile, BofA's survey indicates that fund managers are still keeping their eyes on commercial real estate, a sector that has wobbled under the weight of high interest rates.Between tighter monetary policy and a significant pullback in office demand, worry has mounted regarding whether commercial real estate entities can pay off their debt. Already, <a target="_blank" href="https://www.businessinsider.com/commercial-real-estate-big-trouble-crash-bank-crisis-2024-2">$1 trillion is due to mature by the end of this year</a>, and defaults are hitting even <a target="_blank" href="https://www.businessinsider.com/commercial-real-estate-debt-property-losses-mortgage-interest-rates-prices-2024-7">high-quality bonds</a>.Most exposed to the sector are regional banks, and concern <a target="_blank" href="https://www.businessinsider.com/real-estate-ceo-scott-rechler-regional-banks-commercial-real-estate-2023-3">has persisted</a> about consequences in this sector.Otherwise, BofA found that investors remain optimistic overall, with 68% expecting the global economy to achieve a "soft landing." In fact, 39% consider monetary policy as too strong worldwide.Concerning the US, the bank indicated that this enthusiasm may be too strong:"We believe "hard landing" risks are underpriced given the slowdown of US consumer, labor market, government spending… this makes us most bullish on bonds and gold in H2'24," it wrote.Meanwhile, "geopolitical conflict" topped "higher inflation" as the biggest tail risk for the first time in six months, BofA found.

Wall Street sees this opaque corner of financial markets as the likeliest source of a credit crisis, Bank of America says

<div type="image" title="RBI" agency="ANI" height="900" width="1200" msid="105464045" hostid="261" sizebytes="40796" caption="&amp;lt;p&amp;gt;RBI&amp;#39;s vigilance: New consumer credit norms to bolster India&amp;#39;s financial stability amidst surging loan growth&amp;lt;/p&amp;gt;"></div>In a proactive move aimed at mitigating potential systemic risks associated with the rapid growth of <keyword id="437168" type="General" weightage="20" keywordseo="consumer-credit" source="Orion">consumer credit</keyword>, the Reserve Bank of India (<keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword>) has implemented stringent measures, impacting both banks and non-bank financial institutions (NBFIs). <keyword id="125045" type="General" weightage="20" keywordseo="fitch-ratings" source="Orion">Fitch Ratings</keyword> has provided insights into the repercussions of these regulatory adjustments on the financial sector. The central focus of the regulatory adjustments is to mandate banks and NBFIs to allocate more capital against unsecured consumer credit. Fitch Ratings views these changes as a credit-positive effort by regulatory authorities to control emergent risks in consumer credit. Notably, the growth of unsecured credit card loans and personal loans by banks witnessed an impressive 29.9 per cent and 25.5 per cent year-on-year increase, respectively, in the first half of the financial year ending March 2024. This surge in consumer credit raised concerns, prompting the need for preventive measures. The increasing exposure to unsecured consumer credit considered a riskier <keyword id="6360217" type="General" weightage="20" keywordseo="loan" source="Orion">loan</keyword> category, signals a greater risk appetite among banks and NBFIs. This trend is attributed to the institutions seeking to protect net interest margins (NIMs) amid fierce competition for secured retail loans. The regulatory changes introduce higher risk weightings, aligning for both banks and NBFIs. While risk weightings for credit-card lending increase to 125 per cent (from 100 per cent previously) for NBFIs, banks maintain a higher 150 per cent. Microfinance is excluded from higher risk weights for NBFIs, distinguishing it from banks. Fitch Ratings estimates that the measures may lower the common equity Tier 1 (CET1) ratio of the banking system by around 30 basis points. The impact varies for Fitch-rated banks, ranging from 6 to 34 basis points, with a double-digit impact expected for private banks like State Bank of India (SBI) and Canara Bank. Private banks, with relatively better CET1 capitalization, are expected to maintain reasonable capitalization even after the changes. The measures, however, may not significantly lower banks' capital scores or standalone Viability Ratings (VRs), though SBI's VR headroom could narrow. Fitch-rated NBFIs, including Shriram Finance Limited, Muthoot Finance Ltd, IIFL Finance Limited, and Manappuram Finance Limited, witness an impact on capitalization ratios, loan growth, and future asset quality. However, the overall impact is expected to be limited, with these entities benefiting from reduced systemic risk. NBFIs may experience a rise in bank funding costs by 40 to 60 basis points. This assumes that banks pass on capital costs from higher risk weights on loans to NBFIs. Larger NBFIs are better positioned to negotiate favorable terms with banks, while lower-rated entities could face greater increases. Loans to housing finance companies and NBFIs eligible for priority sector classification are excluded from the adjustment, benefiting entities like Shriram due to their priority sector exposure. The regulatory changes aim to strike a balance between fostering consumer credit growth and preventing the buildup of systemic risks. The phased implementation of these measures underscores the regulators' commitment to maintaining financial stability while allowing financial institutions time to adapt to the new norms. As India's financial landscape undergoes these adjustments, stakeholders are closely monitoring the impact on lending practices, risk management, and overall economic resilience. (ANI)

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