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New Delhi, Mar 12 () Lakshmi Vilas Bank on Thursday asserted that its liquidity coverage ratio is more than that prescribed by the RBI and assured its customers that their money is safe. The bank's statement came in response to news reports that claimed the bank was in "trouble". "We would like to inform that the said articles are misleading and factually incorrect. Our liquidity coverage ratio is at a comparable level more than what is prescribed by the Regulator and we are in the process of recovering our NPAs and our quantum of NPA has in fact marginally come down in the last quarter (December 2019)," the bank said.The bank would like to take this opportunity "to assure our customers that their deposits are safe in our bank." "We also request our customers to ignore any market rumours that are based on unfounded news reports. We will keep you informed about our capital raising plans as per the regulations in force," it said.Several private sector lenders on Wednesday had issued statements regarding their financial positions and assured customers that their deposits were safe in the wake of Yes Bank crisis post which banking stocks have suffered substantial losses.LVB shares closed at Rs 15.05 on BSE, up INR 4.88 per cent from the previous close. KPM BKS MRMR

LVB says liquidity coverage ratio higher than RBI mandated level

<ul><li>On 27 September, India’s central bank eased a liquidity coverage requirement imposed on banks and said it would provide all necessary funding support to the banking sector. </li><li>The <keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword> has raised the facility to avail funds for liquidity coverage ratio (LCR), which measures the amount of liquid assets held by banks against short-term <keyword id="44647" type="ORGANIZATION" weightage="20" keywordseo="debt">debt</keyword>, from 11% to 13%. </li><li>This will allow banks to increase the weightage given to government securities when calculating their <keyword id="6493444" type="DEFINITION" weightage="20" keywordseo="Statutory-Liquidity-Ratio">statutory liquidity ratio</keyword> and free up deposits for their short-term funding needs. </li></ul>Following <a href="https://www.businessinsider.in/indias-main-financial-regulators-and-its-largest-bank-are-trying-to-calm-investors-amid-fears-of-a-liquidity-crisis/articleshow/65929921.cms">a promise </a>to investors that it would step in to prevent a liquidity crisis amongst Indian lenders as well as a subsequent <a href="https://in.reuters.com/article/india-shadowlenders/finance-ministry-urges-rbi-to-take-steps-to-ease-liquidity-tackle-credit-crunch-idINKCN1M609Y">push</a> from India’s finance ministry, the Reserve Bank of India (RBI) looks like its making good on its word, albeit at the cost of its mandate to manage risk. On 27 September, India’s central bank eased a requirement imposed on banks related to liquidity coverage and said it would provide all necessary funding support to the banking sector. The RBI raised the facility to avail funds for liquidity coverage ratio (LCR), which measures the amount of liquid assets held by banks against short-term debt, from 11% to 13%. This will allow banks to increase the weightage given to government securities, which is a liquid asset, when calculating their statutory liquidity ratio, which measures the amount of deposits invested in liquid assets. Hence, this will free up banks’ deposits so they can meet their funding needs in the short-term. And their funding needs are dire. Earlier this week, the liquidity deficit was estimated to be ₹1.4 trillion. However, In doing so, the RBI is effectively trading short-term benefits for longer-term pain. The current liquidity crisis stems from the aversion of institutional investors to buy the debt instruments of non-banking financial companies like IL&amp;FS, which is on the brink of default. By relaxing liquidity coverage requirements for banks, the RBI is allowing banks greater freedom in how they use their deposits and also letting them take on riskier short-term debt so a lot more money will enter the system, which will have an inflationary effect. In essence, domestic lenders are being allowed to use a greater percentage of their deposit-holders’ money to pay down their short-term debt obligations and extend credit to borrowers. In the event of a market downturn or a loss of faith in these banks, they could face a run on their deposits, which will be fatal given their lower risk buffer. The finance ministry has insisted that the RBI also relax reserve requirements for banks, under which banks set aside a certain portion of funds with the central bank. Earlier this week, the RBI took a page out of the European Central Bank’s playbook on <a href="https://www.ecb.europa.eu/explainers/show-me/html/app_infographic.en.html">“quantitative easing”</a> and said it would buy around <a href="https://www.thehindubusinessline.com/money-and-banking/rbi-to-conduct-omo-to-infuse-liquidity/article25029705.ece">₹100 billion</a> worth of <keyword id="6370709" type="UNKNOWN" weightage="20" keywordseo="Government-bonds">government bonds</keyword> from the open market to inject funds into the economy.

The Reserve Bank of India is trying to prevent a liquidity crisis at banks by relaxing an important risk requirement

The <keyword id="19922074" type="General" weightage="20" keywordseo="Reserve-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank" meta.hostid="261" meta.entityid="Reserve Bank">Reserve Bank</keyword> is expected to hold its key rates at the forthcoming <keyword id="22706079" type="General" weightage="20" keywordseo="policy-review" source="keywords">policy review</keyword>, but may sound more confident about reaching its 4% inflation objective, a foreign brokerage said on Wednesday. The rate-setting panel may prefer to stick to the 'withdrawal of accommodation' stance of the <keyword id="20104157" type="General" weightage="20" keywordseo="monetary-policy" source="keywords">monetary policy</keyword>, HSBC said in the report on the eve of the <keyword id="19899808" type="General" weightage="100" keywordseo="RBI" source="keywords">RBI</keyword> <keyword id="19918491" type="General" weightage="20" keywordseo="MPC" source="keywords">MPC</keyword>'s decision. "While it's a close call, we also think the policy stance will remain unchanged, even as the RBI sounds more confident than before about getting to its 4% <keyword id="20661141" type="General" weightage="20" keywordseo="inflation-target" source="keywords">inflation target</keyword>," it said, listing out the aspects it will watch out for in the document or the resolution. These include any softness in tone around increased confidence of getting to 4% inflation durably, or a change in growth or inflation forecasts, and, further commentary around the use of OMO (open market operations) sales to take out excess liquidity. In the background of another member dissenting at the last policy review, the brokerage said the number of MPC members calling for a rate cut or change in stance will also be watched keenly. Apart from this, it said any more colour on the plans to change regulatory requirements on the <keyword id="20479869" type="General" weightage="20" keywordseo="liquidity-coverage-ratio" source="keywords">liquidity coverage ratio</keyword>, which is reported to have a bearing on banks' profitability, will also be watched, it said. On the stance questions, there are several points in support of softening from the current "hawkish" posturing, the brokerage said, adding that there are an equal number of aspects against such a move as well. Factors such as global turmoil, improving rains, soft core inflation, weaker credit growth and fiscal consolidation support a softening of the stance, while on the other side, there are competing ones like long wait for a durable fall in food inflation, loose financial conditions, OMO sales and growth being strong on the other side, it said.

RBI to hold rates, may sound more confident of reaching inflation target, says report

New Delhi, Mar 11 () Private sector lender Karur Vysya Bank (KVB) on Wednesday said it is well capitalised, profitable and a "fundamentally strong" institution. Earlier in the day, peer lender RBL Bank had also issued a similar statement in the wake of various rumours post the Yes Bank crisis. "KVB is highly capitalised, with its Capital to Risk Weighted Assets Ratio (CRAR) at 15.87 per cent against the regulatory requirement of 10.875 per cent. It is a consistently profitable bank. KVB has the distinction of being consistently profitable throughout it's of 104 year history," it said in a statement. Further, the private sector lender said that it has healthy liquidity levels. "KVB manages its liquidity on a conservative basis to ensure that customer needs are met immediately. In keeping with this philosophy, KVB's liquidity coverage ratio (a ratio that measures the liquidity available versus uses over a prescribed period) is 306.23 per cent against a regulatory requirement of 100 per cent. "This indicates very high level of liquidity to meet any obligations," it added. The bank said in customer servicing, it ensures that high levels of capital and liquidity are maintained while prudently managing the risks. "KVB is a fundamentally strong institution across all relevant parameters. Taking advantage of the opportunities presented in India, KVB continues to grow prudently. KVB's investment in digital technology has enabled it to attract new customer segments while deepening relationship with existing customers," it added. Karur Vysya Bank said it has built a reputation for putting its customers first at all times. "This includes our deposit customers whose interests have always been protected by ensuring high levels of capitalisation (High Capital Adequacy), prudent liquidity management, high quality risk management and consistent profitability," it added. Stock of KVB closed at Rs 36.70 on BSE, up 2.95 per cent. KPM ABM

Karur Vysya Bank says financial position strong

New Delhi, Apr 17 () Steps announced by the Reserve Bank of India will provide liquidity for growth, Commerce and Industry Minister Piyush Goyal said.The RBI on Friday further eased bad-loan rules, froze dividend payment by lenders and pushed banks to lend more by cutting the reverse repo rate by 25 basis points, as it unveiled the second set of measures to support the economy hit hard by the coronavirus-led slowdown."Today's steps by RBI will provide liquidity for growth and help India emerge as a world leader in a post COVID-19 world," he said in a series of tweets.The minister said that exclusion of moratorium period from 90 day NPA norm will help borrowers, while simultaneously the health of banks is being maintained through 10 per cent higher provisioning and stopping dividends for the year."Liquidity in the economy will be ensured as banks are being encouraged to lend by reducing Reverse Repo Rate by 0.25 per cent while banks which are facing liquidity issues will benefit from reduction in liquidity coverage ratio," he added. RR BALBAL

RBI measures to provide liquidity for growth: Goyal

New Delhi, Jun 17 () State-owned Union Bank of India on Wednesday said the profitability of the bank may be impacted in the first two quarters of the current fiscal due to slowdown in economy caused by the nation-wide lockdown imposed to contain the spread of COVID-19 pandemic. However, profitability is likely to improve in the second half of the current fiscal subject to restoration of normal economic activity. There may be an impact on revenue of the bank during the first half of the current financial year due to slowdown of economic activity during the lockdown, Union Bank of India said in a disclosure to stock exchanges. With measures being taken by Government of India and state governments, normalcy is expected to be restored by third or fourth quarter of the current financial year, it said. "The bank is adequately capitalised to take care of its present and future operations. Any capital and liquidity constraints on account of COVID-19 is not foreseen at present," it said. On the liquidity position, it said, there is no cash crunch as timely measures were taken by the RBI and the Government of India. The bank is regularly monitoring its liquidity position through liquidity returns and computation of Liquidity Coverage Ratio, it added. DP MR

Profitability may be impacted in 1st half due to COVID-19: Union Bank of India

Mumbai, Apr 17 () To ensure that the repayment moratorium to help individuals and businesses to tide over the coronavirus-triggered disruptions does not land banks in a liquidity crisis, the RBI on Friday lowered the liquidity coverage ratio (LCR) to 80 per cent from 100 per cent with immediate effect. The LCR requires banks to hold enough high-quality liquid assets such as short-term government bonds that can be sold to fund a stress scenario. Banks are required to hold LCR which is 100 per cent equivalent of projected cash outflows during the 30-day stress scenario. Addressing the media via video on Friday, RBI Governor Shaktikanta Das said "to ease the liquidity position at the level of individual institutions, the LCR requirement for commercial banks is being brought down from 100 to 80 percent with immediate effect." The governor said the LCR requirement will be gradually restored back in two phases -- 90 per cent by October 1, 2020 and 100 per cent by April 1, 2021. He said the Reserve Bank has been proactively taking measures to address the systemic liquidity issues through a slew of monetary and market operations. The LCR was introduced as part of the Basel-III reforms following the 2008 global financial crisis and was finalised by the Basel Committee on Banking Supervision in January 2013. The RBI made LCR binding on banks from January 1, 2015 with a transition time where they reached 100 per cent LCR by January 1, 2019. The LCR is calculated by dividing a bank's high-quality liquid assets by its total net cash flows, over a 30-day stress period. Here, high-quality liquid assets include only those which can be converted easily and quickly into cash. Commenting on the LCR reduction, ratings agency Icra said the relaxation will enable banks meet the regulatory LCR requirements in case their reliance on bulk deposits or interbank lines increases. This will help small private banks all the more as they have been witnessing deposit outflows, increasing their reliance on interbank funding. Such interbank funding is included in high run-off while calculating the LCR ratio for banks, the agency added. R K Gurumurthy, treasury head at Lakshmi Vilas Bank, said the relaxation in the LCR requirement to 80 per cent releases the pressure on banks to divert a larger part of their investments in high quality liquid assets. BEN ABMABM

Banks get 20 pc LCR breather till Oct

<ul class="summary-list"><li><keyword id="6355375" type="DEFINITION" weightage="60" keywordseo="Liquidity">Liquidity</keyword> refers to how much <keyword id="37885" type="ORGANIZATION" weightage="60" keywordseo="Cash">cash</keyword> is readily available, or how quickly something can be converted to cash.</li><li><keyword id="768683" type="PERSON" weightage="60" keywordseo="market-liquidity">Market liquidity</keyword> applies to how easy it is to sell an investment — how big and constant a market there is for it.</li><li><keyword id="10261075" type="UNKNOWN" weightage="60" keywordseo="accounting-liquidity">Accounting liquidity</keyword> refers to the amount of ready money a company has on hand; investors use it to gauge a firm's financial health.</li></ul>Liquidity may take on a different meaning depending on the context, but it always has to do with one thing: cash, or ready money. Liquidity refers to the amount of money that is promptly available to meet debts or to use for investment. It indicates the levels of cash available and how quickly a financial asset or security can be converted into cash without losing significant value. In other words, how long it takes to sell. Liquidity is important because it shows how flexible a company is in meeting its financial obligations and unexpected costs. It also applies to the average individual as well. The greater their liquid assets (cash savings and investment portfolio) compared to their debts, the better their financial situation.<h2>Types of liquidity</h2>Liquidity comes in two basic forms: market liquidity, which applies to investments and assets, and accounting liquidity, which applies to corporate or personal finances.<h3>Market liquidity</h3>Market liquidity refers to the liquidity of an asset and how quickly it can be turned into cash. In effect, how marketable it is, at prices that are stable and transparent. High market liquidity means that there is a high supply and a high demand for an asset and that there will always be sellers and buyers for that asset. If someone wants to sell an asset yet there is no one to buy it, then it cannot be liquid. Liquidity is not the same thing as profitability. Shares of a publicly traded company, for example, are liquid: They can be sold quickly on a stock exchange, even if they have dropped in value. There will always be someone to buy them. When investing, it is important for an investor to bear in mind the liquidity of a particular asset or security. Among investments and financial vehicles, the most liquid assets include:<ul><li>Savings/money market accounts</li><li><a href="https://www.businessinsider.com/what-are-blue-chip-stocks" target="_blank" rel="noopener">Stocks traded on major exchanges</a> and exchange-traded funds</li><li><a href="https://www.businessinsider.com/how-to-buy-treasury-bonds" target="_blank" rel="noopener">US government bonds</a></li><li>Commercial paper</li><li>Other short-term money-market securities</li></ul>These all can be sold quickly at their fair value in return for cash. Examples of illiquid assets, or those that can not be converted to cash quickly, tend to be tangible things, like real estate and fine art. They also include securities that trade on foreign stock exchanges, or <a href="https://www.businessinsider.com/what-are-penny-stocks" target="_blank" rel="noopener">penny stocks</a>, which trade over the counter. These items all take a long time to sell.<h3>Accounting liquidity</h3>Accounting liquidity refers to a company's or a person's ability to meet their financial obligations — aka the money they owe on an ongoing basis. With individuals, figuring liquidity is a matter of comparing their debts to the amount of cash they have in the bank or the marketable securities in their investment accounts. With companies, it gets a tad more complex. Liquidity takes a look at a company's current assets versus its current liabilities.<h2>Why liquidity is important</h2>The higher their liquidity, the better the financial health of a business or a person is. For example, say a company had a monthly loan payment of $5,000. Its sales are doing well and the company is realizing profits. It has no issues in meeting its $5,000 monthly obligation.Now say the economy suffered a sudden economic downturn. Demand for the business's products has vanished so, therefore, it is not bringing in revenue and making profits; however, it still has to meet its $5,000 monthly loan bill. Unfortunately, the company only has $3,000 of cash on hand and no liquid assets to quickly sell for cash. It will default on its loan within one month. Now if the company had $10,000 in cash and other liquid assets worth $15,000 that it could sell in a few days for cash, it would be able to meet its debt obligations for many months to come, hopefully until the economy rebounds. The same holds for human beings. The more savings an individual has the easier it is for them to pay their debts, such as their mortgage, car loan, or credit card bills. This particularly rings true if the individual loses their job and immediate source of new income. The more cash they have on hand and more liquid assets they can sell for cash, the easier it will be for them to continue to make their debt payments while they look for a new job.<h2>Determining a company's liquidity</h2>Three liquidity ratios are primarily used to measure a company's accounting liquidity:<ul><li>Current ratio</li><li>Quick ratio</li><li>Cash ratio</li></ul><h3>Current ratio basics</h3>The current ratio, also known as the working capital ratio, seeks to determine a company's ability to meet its short-term obligations that are due within a year. It is calculated as:<div type="image" title="the current or working capital ratio" height="719" width="1668" msid="79181419" hostid="261"></div>The higher the ratio, the better a company's financial health is and the stronger its ability to meet its financial obligations.For example, if a company has current assets of $3 million and current liabilities of $2 million, it will have a current ratio of 3/2 = 1.5. Now, if it has current assets of $8 million and current liabilities remain at $2 million, it will have a current ratio of 8/2 = 4. <h3>Quick ratio basics</h3>The quick ratio, aka the acid test ratio, also measures current assets against current liabilities. However, in its calculation of current assets, it only uses the most liquid assets: cash, marketable securities, and accounts receivable. It does not include inventory, which the current ratio does, as inventory cannot be sold as quickly as the other assets.There are actually two formulas for the quick ratio:<div type="image" title="the 2 quick ratios" height="1354" width="1668" msid="79181421" hostid="261"></div>Again, the higher the ratio, the better a company is situated to meet its financial obligations.<h3>Cash ratio basics</h3>The cash ratio is an even more stringent ratio than the quick ratio. It compares only cash to current liabilities. If a company can meet its financial obligations through just cash without the need to sell any other assets, it is an extremely strong financial position.The cash ratio is calculated as:<div type="image" title="the cash ratio" height="719" width="1667" msid="79181423" hostid="261"></div><h2>What liquidity ratios can tell you</h2>A company's liquidity can be a key factor in deciding whether to invest in its stock or buy its corporate bonds.High liquidity ratios indicate a company is on a strong financial footing to pay its debt. Low liquidity ratios indicate that a company has a higher likelihood of defaulting, particularly if there is a downturn in its specific market or the overall economy.Whatever the ratio you're using: <ul><li>A value of 1 indicates that a company has current assets equal to current liabilities. </li><li>A value above 1 indicates that a company has more current assets than current liabilities. </li><li>A value below 1 indicates that a company has more current liabilities than current assets and is not in a position to meet its financial obligations. </li></ul>(For the cash ratio the values would relate to just cash as opposed to all current assets.)When comparing liquidity ratios, it is important to only compare companies within the same industry. This is because every type of industry is going to have different asset and debt requirements.For example, a technology company does not operate the same as an airline company. The tech firm might need to buy computers and office space, while an airline needs to buy planes, a large labor force, and jet fuel. So it's natural for an airline company to carry higher levels of debt.Financial analyst reports on companies often include liquidity ratios. Otherwise, an investor might have to calculate it themselves, using the info reported on a company's financial statements or in its annual report.<h2>The financial takeaway</h2>Liquidity refers to the amount of money an individual or corporation has on hand and the ability to quickly convert assets into cash. The higher the liquidity, the easier it is to meet financial obligations, whether you're a business or a human being.If a person has more savings than they do debt, it means they are more financially liquid.Companies with higher levels of cash and assets that can be readily converted to cash indicate a strong financial position as they have the ability to meet their debts and expenses, and, therefore, are better investments. The liquidity of a particular investment is important as it indicates the level of supply and demand of that security or asset — and how quickly it can be sold for cash when needed. <h2>Related Coverage in <a href="https://www.businessinsider.com/investing-reference" target="_blank" rel="noopener">Investing</a>:</h2><h3><a href="https://www.businessinsider.com/what-is-volatility" target="_blank" rel="noopener">Volatility measures how dramatically stock prices change, and it can influence when, where, and how you invest</a></h3><h3><a href="https://www.businessinsider.com/what-is-diversification" target="_blank" rel="noopener">What is diversification? A portfolio strategy that uses a variety of investments to limit risk</a></h3><h3><a href="https://www.businessinsider.com/what-is-a-corporate-bond" target="_blank" rel="noopener">A corporate bond provides companies with cash and investors with income — here's how to evaluate the risks and rewards</a></h3><h3><a href="https://www.businessinsider.com/money-market-account-vs-money-market-fund" target="_blank" rel="noopener">The key differences between a money market account and a money market fund, and how they each serve different financial needs</a></h3><h3><a href="https://www.businessinsider.com/etf-vs-mutual-fund" target="_blank" rel="noopener">ETFs and mutual funds can instantly diversify your portfolio, but they differ in how they're traded, managed, and taxed. Here's what you should know.</a></h3>

What is liquidity? It's how easily you can sell an asset for cash — here's when and why it matters to your finances

New Delhi, Jan 29 () Maintaining 'Rating Watch Negative (RWN)' on Yes Bank, India Ratings on Wednesday said the lender continues to remain in discussions with potential investors but raising sizeable capital in the near-term could be challenging.
 RWN indicates that the rating will be either affirmed or downgraded.
 India Ratings and Research (Ind-Ra) said it continues to await developments on Yes Bank's equity raising, which in the rating agency's opinion is critical for providing sufficient cushion to the possible credit cost impact from the stressed asset pool on regulatory capital requirement in the short- and medium-term.
It has maintained RWN on the Basel III tier-2 bonds of Rs 11,000 crore, additional Basel tier-1 bonds of Rs 11,100 crore and infrastructure bonds of Rs 3,580 crore. 
The agency has withdrawn the bank's short-term rating since there is no outstanding against the same.
"Although the liquidity position of the bank seemed adequate at end-September 2019 (liquidity coverage ratio of 114 per cent), Ind-Ra believes that in the absence of any swift capital raise, the bank's ability to manage its asset and liability maturities could get tested further.
"The bank continues to remain in discussions with various potential investors. However, Ind-Ra believes raising sizeable capital in the near term could be challenging and could require various regulatory and other approvals," it added. 
Ind-Ra would be reviewing the rating on the bank again in February.
The key rating drivers included delays in capital raising and rapid credit migration over the last few quarters in some of the bank's corporate exposure spread over multiple sectors.
The bank's liquidity coverage ratio was 114 per cent at end-September as against the regulatory requirement of 100 per cent.
It also said that bank's business model could evolve and may settle at lower non-interest income levels.
Yes Bank had initially planned to raise capital of over USD 1.2 billion in the current fiscal, but its board has rejected the binding term sheets of USD 1.2 billion offered by Canadian investor SPGP Group/Erwin Singh Braich. 
 Also, the decision to consider the binding term sheet of USD 500 million by Citax Investment Group is yet to be finalised by the board. 
 "Furthermore, the various approvals that the bank and/or the investors may require could extend the timeline of the proposed equity infusion," Ind-Ra said.
Mumbai-headquartered Yes Bank is a new generation private bank incorporated in 2004. The bank's asset size stood at Rs 3,71,160 crore at end-June 2019, with a net profit of Rs 1,720 crore in FY19. KPM ABM

Raising sizeable capital could be challenging for Yes Bank: Ind-Ra

Reuters<ul><li>The US economy risks a brutal depression unless the government relaxes banking rules and boosts liquidity in markets, Tom Barrack <a href="https://medium.com/@tombarrackjr/preventing-covid-19-from-infecting-the-commercial-mortgage-market-e7444701745e">warned in a Medium post on Sunday</a>.</li><li>The real estate billionaire and Trump ally predicted that "almost every American will be financially challenged to a degree not experienced since the Great Depression."</li><li>Barrack cautioned that a liquidity crunch in the commercial real estate market could cause more economic damage than "the 1987 crash, September 11 attacks, and 2008 recession, combined."</li><li>He called for Congress to provide up to $500 billion for the US Treasury to support liquidity, and for regulators to adjust or suspend rules around mark-to-market pricing, accounting for loan modifications, and liquidity coverage ratios.</li><li><a href="https://www.businessinsider.com/international">Visit Business Insider's homepage for more stories</a>.</li></ul>The novel coronavirus threatens to plunge the US economy into a devastating depression unless the government relaxes banking regulations and plows billions into the financial system, the real estate billionaire Tom Barrack <a href="https://medium.com/@tombarrackjr/preventing-covid-19-from-infecting-the-commercial-mortgage-market-e7444701745e">warned in a Medium post on Sunday</a>.The Colony Capital boss and longtime ally of President Donald Trump warned that shrinking business revenues, widespread layoffs, and dwindling consumption mean that "almost every American will be financially challenged to a degree not experienced since the Great Depression."Coupled with a credit crunch, illiquid businesses would be forced to fire more workers, rendering more American households unable to pay their bills or buy much of anything, hurting business revenues, leading to more layoffs, and so on."If not immediately addressed, this cycle cascades into chaos," Barrack said, adding that the length of unemployment lines in the US could "explode" by next week.<a href="https://www.businessinsider.com/stock-market-crash-coronavirus-risks-financial-crisis-low-albert-edwards-2020-3">Read more: 'Massive implications': One market bear breaks down how the Fed's unprecedented actions before the coronavirus turmoil may have opened the door to a 72% crash</a><h2>"Domino effect"</h2>Mounting pressure from the pandemic has left the market for commercial real estate mortgage loans "on the brink of collapse," Barrack said in the Medium post. If debtors aren't allowed to restructure their loans, that could spark a "domino effect" as mass defaults hammer everyone from property owners and hoteliers to tenants and employees, he added.If liquidity dries up across the broader real estate commercial loan market, he warned, "the economic impact, magnified by widespread total industry shutdowns throughout the American economy, could be exponentially worse than the economic effects of the 1987 crash, September 11 attacks, and 2008 recession, combined.""The long-term impact on the economy could be catastrophic," Barrack added. Without urgent government intervention, the real estate fallout "could dwarf the impacts of the Great Depression," he warned.Barrack pointed to the US hotel industry as an example. He predicted it could lose between 2.8 million and 3.5 million jobs - about eight times its layoffs during the 2008 financial crisis - from coronavirus and the measures to slow its spread.<h2>Tweaking the rules</h2>The real estate tycoon proposed several steps that US authorities should take to prevent an economic meltdown:<ul><li>Provide up to $500 billion to the Treasury to support liquidity in the financial system.</li><li>Temporarily suspend regulatory rules around mark-to-market pricing.</li><li>Lift accounting requirements for loan modifications related to the coronavirus.</li><li>Suspend the introduction of a new rule regarding expected credit losses.</li><li>Give banks greater leeway to take action without violating their liquidity coverage ratios.</li></ul><a href="https://www.businessinsider.com/stock-market-crash-bottom-end-6-part-checklist-incomplete-bofa-2020-3">Read more: Bank of America lays out the 6 things that need to happen for the stock-market crash to truly end - and warns only 4 have occurred so far</a><a href="https://www.businessinsider.com/intelligence/10-up-and-coming-fintechs-2019?IR=T&amp;itm_source=businessinsider&amp;itm_medium=ctgr_bii&amp;itm_term=ctgr_leadgen&amp;itm_content=finance&amp;itm_campaign=10-up-and-coming-fintechs-2019-2"></a> <h3>NOW WATCH: <a href="https://www.businessinsider.com/bidets-better-than-using-just-toilet-paper-2019-9">Why bidets are better than buying countless rolls of toilet paper</a></h3>

Trump ally Tom Barrack warns coronavirus downturn could rival the Great Depression unless the government relaxes banking rules and boosts market liquidity

Mumbai, Dec 27 () Non-bank lenders witnessed stress in their asset quality in the first half of the current fiscal, with gross NPA ratio increasing to 6.3 per cent in September 2019 from 6.1 per cent in March, according to an RBI report.
 However, the net NPA ratio of non-banking financial companies (NBFCs) remained steady at 3.4 per cent between end-March 2019 and end-September 2019, RBI's Financial Stability Report showed.
 As at end-September 2019, the capital to risk assets ratio (CRAR) of the NBFC sector stood at 19.5 per cent, lower than 20 per cent as at end-March 2019.
 The report said while the importance of NBFCs in credit intermediation is growing, the IL&amp;FS episode brought the focus on the asset liability mismatches of non-bank lenders, which poses risks to the sector as well as the financial system as a whole.
 To address this, the RBI introduced the liquidity coverage ratio (LCR) requirement for all deposit-taking and non-deposit taking NBFCs with an asset size of Rs 5,000 crore and above.
 The new regulation mandates NBFCs to maintain a minimum level of high-quality liquid assets to cover expected net cash outflows in a stressed scenario.
 NBFCs are required to reach LCR of 100 per cent over a period of four years commencing from December 2020.
 "The non-banking financial intermediation space which took up a significant share in credit intermediation after the relative passivity of public sector banks due to their impaired balance sheets, continues to show signs of restructuring of their underlying business models," RBI Governor Shaktikanta Das wrote in the foreword of the report.
 While credit markets are becoming more competitive following recapitalisation of state-run banks, market funding for NBFCs is getting more discerning based on prudential concerns, he added.
 The report said NBFCs were the largest net borrowers of funds from the financial system with gross payables of around Rs 8,29,468 crore and gross receivables of around Rs 66,635 crore as at end-September 2019.
 A further breakup of payables showed that 48.4 per cent of the funds were obtained from banks, followed by 26 per cent from mutual fund companies and 21.3 per cent from insurance firms, it said. HV ABM
ABM

NBFCs' gross NPA ratio rises to 6.3 pc in Sept: RBI report

<ul><li><keyword id="379935" type="COMPANY" weightage="60" keywordseo="NatWest">NatWest</keyword> posted sharply lower profits last quarter as less income and a hefty impairment charge weighed on its business.</li><li>The British bank's total income tumbled 34% year-on-year to £2.7 billion ($3.5 billion) and its impairment losses soared to over £2 billion, meaning it swung from a pre-tax profit of £1.7 billion ($2.2 billion) to a £1.3 billion ($1.7 billion) loss.</li><li>"Our performance in the first half of the year has been significantly impacted by the challenges and uncertainty our economy continues to face as a result of Covid-19," CEO Alison Rose said in the <a href="https://investors.natwestgroup.com/~/media/Files/R/RBS-IR-V2/results-center/31072020/announcement-h1-2020.pdf">earnings release</a>.</li><li>NatWest's net interest margin fell and its loan impairment rate soared, but it also shored up its finances, increasing both its liquidity coverage ratio and common equity tier one (CET1) ratio.</li><li><a href="https://www.businessinsider.com/">Visit Business Insider's homepage for more stories</a>.</li></ul>NatWest suffered a sharp slump in second-quarter profits as pandemic-related lockdowns and travel restrictions weighed on business activity and consumer spending. The British bank — formerly known as <keyword id="6371690" type="UNKNOWN" weightage="60" keywordseo="RBS">RBS</keyword> — also shored up its finances in case the crisis worsens."Our performance in the first half of the year has been significantly impacted by the challenges and uncertainty our economy continues to face as a result of Covid-19," CEO Alison Rose said in the <a href="https://investors.natwestgroup.com/~/media/Files/R/RBS-IR-V2/results-center/31072020/announcement-h1-2020.pdf">earnings release</a>.Read more: <a href="https://www.businessinsider.com/profile-of-kewsong-lee-new-sole-ceo-the-carlyle-group-2020-7?r=US&amp;IR=TIR=T" target="_blank" rel="noopener noreferrer">Kewsong Lee just took full control of Carlyle. 20 insiders reveal how he's already put his mark on the $221 billion private-equity giant — and what it means for the future of the firm.</a>"However, NatWest Group has a robust capital position, underpinned by a resilient, capital-generative and well-diversified business."NatWest stock climbed 1% on Friday, outpacing a 0.7% gain for the benchmark FTSE 100 index.Here are the key numbers:Revenue: £2.68 billion versus the £2.66 billion estimate<keyword id="6357061" type="SPONSORED" weightage="60" keywordseo="earnings">Earnings</keyword> per share: -8.2p versus the -2.6p estimateNatWest's net interest income slid 3% and its non-interest income tumbled 63% year-on-year last quarter, driving total income down 34% to £2.7 billion ($3.5 billion).The bank's impairment losses also soared almost nine-fold year-on-year to £2 billion, meaning the bank swung from a £1.7 billion pre-tax profit in the second quarter of 2019 to a £1.3 billion loss last quarter.Read more: <a href="https://www.businessinsider.com/bauposts-klarman-to-investors-8-permanent-changes-from-the-virus-2020-7?r=US&amp;IR=TIR=T" target="_blank" rel="noopener noreferrer">Here are the 8 'long-lasting implications' of the pandemic hedge-fund billionaire Seth Klarman lays out to investors in a new letter</a>NatWest's earnings underscored the challenges of lending during a <keyword id="43587" type="ORGANIZATION" weightage="60" keywordseo="pandemic">pandemic</keyword>. Its net interest margin shrunk from 2.02% to 1.67%, while its loan impairment rate surged from 0.3% to 2.29%.The bank also worked to reduce the risk it will be caught short of cash. It increased its liquidity coverage ratio from 152% to 166% in the first half of the year, and its common equity tier one (CET1) ratio — a key measure of a bank's financial strength from a regulatory standpoint — from 16.2% to 17.2%.

You Searched For "liquidity coverage ratio" and got 12 results

LVB says liquidity coverage ratio higher than RBI mandated level

PTI

The Reserve Bank of India is trying to prevent a liquidity crisis at banks by relaxing an important risk requirement

Dilsher Dhillon

RBI to hold rates, may sound more confident of reaching inflation target, says report

PTI

Karur Vysya Bank says financial position strong

PTI

RBI measures to provide liquidity for growth: Goyal

PTI

Profitability may be impacted in 1st half due to COVID-19: Union Bank of India

PTI

Banks get 20 pc LCR breather till Oct

PTI

What is liquidity? It's how easily you can sell an asset for cash — here's when and why it matters to your finances

Ali Hussain

Raising sizeable capital could be challenging for Yes Bank: Ind-Ra

PTI

Trump ally Tom Barrack warns coronavirus downturn could rival the Great Depression unless the government relaxes banking rules and boosts market liquidity

Theron Mohamed

NBFCs' gross NPA ratio rises to 6.3 pc in Sept: RBI report

PTI

British bank NatWest swings to a 2nd-quarter loss of $1.7 billion as income tumbles and impairment charges soar

Theron Mohamed

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