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Nov 14 – Nov 19

Top news of the week

Bank credit growing 15% per annum in fiscal 2023-24

Bank credit growth is seen growing at 15% per annum in fiscal 2023-24 as per the CRISIL report. Economic recovery, cleaner balance sheets added to the credit growth.Credit growth so far this fiscal has printed at around 18%, which is a decadal high.

As per the report the forecast is based on an expected 7% GDP growth this fiscal, as well as the expected continuation of the credit push from government’s infrastructure spends, higher working capital demand in a high-inflation environment, and some substitution of debt capital market borrowings.After a significant clean-up and strengthening of balance sheets, along with substantial equity infusion, state-run banks are eyeing higher growth. As a result, their credit growth is seen at 12% over this fiscal and next, still lower than the 17% expected for private banks, the report said.The report admits that even though growth would moderate next fiscal (consensus is around or under 6 per cent), this would be on a higher base, thereby having limited impact on credit.

CRISIL report expects credit growth this year to be driven more by retail and MSME segments, while corporate credit could be the larger contributor next fiscal.Retail credit, which constitutes 26% of total advances, is expected to grow the fastest at 17-19%, driven by home loans which is the largest sub-segment despite the rising interest rates and real estate prices.The MSME segment is expected to grow at a reasonable rate of 16-18% over this fiscal and the next, while agriculture credit growth is expected to hover around 10%, supported by reasonably normal monsoons and harvest.

Other Highlights of the Week

RRB may adopt a reform agenda meant for commercial bank

The government may ask prominent regional rural banks to adopt reforms agenda meant for state-run commercial banks under the so-called EASE (Enhanced Access and Service Excellence) programme or a similar initiative to bolster their core banking.

This initiative could be a part of the finance ministry’s broader efforts to further strengthen the RRBs in a time-bound manner to bring them on a par with commercial lenders in at least some key parametres, given their crucial role in boosting credit flow in rural India. Under the revamped version of the EASE initiative, launched by finance minister Nirmala Sitharaman in June, each public-sector bank will have to firm up a three-year road map based on its business priorities. EASENext, the latest and revamped version, has two components: EASE 5.0, which is a common reforms agenda for all PSBs, and a bank-specific medium-term action plan. The common reforms agenda includes the need to invest in new-age capabilities and deepen the on-going reforms to respond to evolving customer needs, changing competition and the technology environment.

Rs. 2.34 lakh crore realised by creditors till September 2022,through insolvency process

As per the,quarterly report of the Insolvency and Bankruptcy Board of India (IBBI) banks, financial institutions and other creditors of stressed companies have realised Rs 2.43 lakh crore through NCLT-supervised insolvency resolution processes against total claims of Rs 7.91 lakh crore till September 30, 2022.According to the report the creditors have realised 177.55 per cent of the liquidation value and 84% of the fair value (based on 456 cases where fair value has been estimated).