Opinion | Banking sector was positive on retail finance
6 years ago

Opinion | Banking sector was positive on retail finance

Live Mint  

Retail lending has had a good run in India in recent years. Disenchantment with corporate finance, the emphasis and almost direction by the concerned ministry to PSBs on increasing the retail portfolio and indeed the continuing interest in this segment across the entire banking industry, as well as the rapid increase in the number and growth of non-banking finance companies, have all played a part. One big setback, though, in the use of technology for making personal loans easily and quickly available is the Supreme Court judgment on the use of Aadhaar. The world at large admired India’s progress on this front and indeed, given the size and spread of our population, this enablement helped enormously in the financial inclusion efforts of banks as well as NBFCs. But an even better development from the point of view of the consumer has been RBI’s announcement in December proposing the use of external benchmarking for floating rate retail loans like home loans from April 2019.

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History of this topic

RBI warns against spillover of unsecured loan stress
2 weeks, 1 day ago

RBI warns against spillover of unsecured loan stress

Live Mint  

Mumbai: Nearly a year after clamping down on exuberance in unsecured loans, India’s central bank has expressed concern about the stress in such loans spilling over to larger, secured loans. “Nearly half of the borrowers availing credit card and personal loans have another live retail loan outstanding, which are often high-ticket loans,” the Reserve Bank of India said in its …

Personal Loans and Services Sector are key drivers of banks credit growth: RBI
2 weeks, 5 days ago

Personal Loans and Services Sector are key drivers of banks credit growth: RBI

Live Mint  

New Delhi, December 27 : The Reserve Bank of India has highlighted that bank credit growth in 2023-24 has been broad-based, with the personal loan and services sectors leading the expansion. The report said, "Bank credit growth in 2023-24 was broad-based, led by services sector and personal loans segment, followed by agriculture and industry". "The shares of services and personal …

Rising Defaults Among Retail Borrowers are Stressing India’s Top Banks
2 months ago

Rising Defaults Among Retail Borrowers are Stressing India’s Top Banks

The Quint  

Given that India’s economic growth relies heavily on domestic consumption, any slowdown in lending could ripple through the broader economy, impacting sectors dependent on consumer spending. Moreover, as banks shift their focus from retail to secured loans to mitigate risks, small and medium enterprises could face reduced access to capital, hindering job creation and slowing down economic expansion. In October, …

NBFCs brace for slower growth as asset stress, fund costs pinch
2 months, 1 week ago

NBFCs brace for slower growth as asset stress, fund costs pinch

Live Mint  

Mumbai: The September quarter results for non-banking financial companies were mixed, as most lenders felt the ripple effects of the Reserve Bank of India’s recent regulatory actions and slowdown in credit flow from banks. Higher funding costs and emerging asset quality concerns—especially in retail, unsecured, and microfinance portfolios—hit profitability in the second quarter, and may lead to a cut in …

Private Banks Brace for Credit Card and Loan Stress in Q2
2 months, 3 weeks ago

Private Banks Brace for Credit Card and Loan Stress in Q2

Live Mint  

Private banks continue to see stress in small-ticket advances, with all lenders barring HDFC Bank reporting a spike in bad loans. Axis Bank's gross slippages jumped 36% year-on-year to ₹4,443 crore, led by unsecured loans. Kotak Mahindra Bank's slippages were up 42% year-on-year, with a significant rise in bad loans in the credit card and microfinance portfolios.

Heed RBI’s warning on rising household debt, falling savings
6 months, 2 weeks ago

Heed RBI’s warning on rising household debt, falling savings

New Indian Express  

The latest round of banking stress tests confirm that bad loans will likely settle at a multi-year low of 2.5 percent this fiscal, provided there is no fresh trouble. According to RBI’s Financial Stability Report released Thursday, bad loans as a proportion of overall loans touched a 12-year low of 2.8 percent in 2023-24, but could rise to 3.4 percent …

Despite RBI measures, unsecured personal loans by banks grow; ICICI leads pack
8 months, 3 weeks ago

Despite RBI measures, unsecured personal loans by banks grow; ICICI leads pack

New Indian Express  

Mumbai: The second largest private sector lender ICICI Bank has the highest exposure in the unsecured personal loan segment at 13.8 percent, while at the system level it is 8.7 percent as of the December 2023 quarter, according to an analysis. The system-wide exposure has more than doubled since March 2018 when it was only 4 percent, while the system …

NBFC lenders find borrowing a costly affair
9 months ago

NBFC lenders find borrowing a costly affair

Live Mint  

MUMBAI : Non-bank lenders are struggling through a spike in borrowing costs as banks have become cautious in lending to them following a regulatory warning, forcing these companies to diversify their money sources. The Reserve Bank of India in November increased the risk weights on NBFCs by 25 percentage points, making their cost of borrowing from banks costlier by 30-50 …

ICRA Revises Growth Forecast For NBFCs, Eyes Another Stronger Performance In FY24
1 year, 5 months ago

ICRA Revises Growth Forecast For NBFCs, Eyes Another Stronger Performance In FY24

ABP News  

ICRA has revised upward the growth outlook for the current financial year for the retail loans of Non-Bank Financial Companies and Housing Finance Companies, which account for the bulk of the overall sector. The NBFC-Retail asset under management, estimated at around Rs 14 lakh crore as of March 2023, is expected to grow at a higher pace of 18-20 per …

Indian Banks GNPAs Down To 5% In September 2022, Macroeconomic Conditions Can Impact Banks Health RBI Report
2 years ago

Indian Banks GNPAs Down To 5% In September 2022, Macroeconomic Conditions Can Impact Banks Health RBI Report

ABP News  

Gross Non-Performing Assets of Indian banks declined to 5 per cent in september but the present macroeconomic environment can impact lenders' health, said a new Reserve Bank of India report. The report said, “from its peak in 2017-18, the GNPA ratio of SCBs has been declining sequentially to reach 5 per cent at end-September 2022.” It said that the number …

Deepen domestic credit to enhance financial stability
2 years ago

Deepen domestic credit to enhance financial stability

Live Mint  

India’s economy has emerged as a beacon with 6.8–7.0% growth expected in fiscal 2022-23, even as the world’s largest economies face a slowdown amid rising inflation and pandemic and war-related disruptions. The financial sector will do well to understand how this worked and ensure that domestic credit keeps flowing in the country even as global uncertainties persist. The data not …

Retail loan boom amid covid: Sign of trouble ahead?
3 years, 6 months ago

Retail loan boom amid covid: Sign of trouble ahead?

Live Mint  

Retail loans, or loans given to individuals, could soon become the largest segment in India’s credit market, taking away the top spot from industrial loans. One retail segment where government banks have leapfrogged private banks is personal loans, according to a December 2020 report on personal loans by CRIF High Mark Credit Information Services, a credit bureau. In March 2020, …

Concerns re-emerge on retail loans asset quality due to rising lockdowns: ICRA
3 years, 8 months ago

Concerns re-emerge on retail loans asset quality due to rising lockdowns: ICRA

Hindustan Times  

The rising Covid-19 cases has again raised concerns on asset quality of retail loans from non-banking financial companies and housing finance companies, according to investment information agency ICRA. Following the second wave of the pandemic, ICRA expects securitisation volumes to again get impacted in Q1 FY22 as NBFCs and HFCs will be more selective in fresh lending. However, said ICRA, …

Non-performing loans in Indian banking sector to rise in next 12-18 months: S&P
4 years, 1 month ago

Non-performing loans in Indian banking sector to rise in next 12-18 months: S&P

The Hindu  

Non-performing loans in the Indian banking sector is likely to witness an uptick and may shoot up to 11% of gross loans in the next 12-18 months, S&P Global Ratings said on Tuesday. It said forbearance is “masking” problem assets for Indian banks arising from COVID-19 and the financial institutions will likely have trouble maintaining momentum after the proportion of …

Not wise to shift entirely towards retail loans: Basu
4 years, 4 months ago

Not wise to shift entirely towards retail loans: Basu

Live Mint  

Mumbai: Turning away from corporate loans to fully embrace the retail customer may not be a good choice for banks, State Bank of India managing director Arijit Basu said, adding lenders may preserve the existing balance in their loan portfolio. The balance of retail, wholesale, corporate, small business loans and agriculture, would broadly remain the same at least for the …

Retail loans may go bad, but won’t hurt banks much
4 years, 7 months ago

Retail loans may go bad, but won’t hurt banks much

Live Mint  

As the growth of bank loans to industry slowed down dramatically in the last six years, retail loans have driven overall loan growth. This led the shift towards retail loans, which include housing loans, vehicle loans, personal loans, credit card outstanding and loans to finance consumer durables. Analysts who follow banks believe the bad loans rate of retail loans will …

Home, car loans will get cheaper
4 years, 11 months ago

Home, car loans will get cheaper

Deccan Chronicle  

Mumbai: As expected, the Monetary Policy Committee of the Reserve Bank of India on Thursday unanimously voted to keep the policy repo rate unchan-ged even as predicting a higher inflation at 6.5 per cent in April-June quarter and a lower economic growth at six per cent in the next fiscal. In a bid to lower interest rates for housing, auto, …

Banking and Finance in 2020: Time for radical cost efficiency and operational scalability
4 years, 11 months ago

Banking and Finance in 2020: Time for radical cost efficiency and operational scalability

Live Mint  

The year 2019 was an eventful one for the banking and financial services sector. These included a one-time partial credit guarantee scheme allowing PSBs to purchase high-rated pooled assets from NBFCs and Housing Finance Companies, introduction of liquidity coverage ratio requirements for NBFCs for better liquidity management, empowering Reserve Bank of India to replace directors of non-government NBFCs or supersede …

Banks' high retail loan book due to securitisation by NBFCs, not actual credit demand: Crisil
5 years, 1 month ago

Banks' high retail loan book due to securitisation by NBFCs, not actual credit demand: Crisil

Firstpost  

Adjusted for the securitisation, which is when a lender transfers future receivables to another one, retail credit growth will come at a lower 12 percent for the first half of the fiscal, as aga Mumbai: Banks’ retail credit growth is up due to higher reliance on securitisation by liquidity starved non-banking lenders, and does not represent a higher credit pick-up …

RBI mandate to link retail, MSME loans with external benchmark rates is credit negative for banks: Moody's
5 years, 4 months ago

RBI mandate to link retail, MSME loans with external benchmark rates is credit negative for banks: Moody's

Firstpost  

The RBI has so far this year cut interest rate by 110 basis points but lenders have transmitted only a part of it to borrowers in the form of a lower cost of taking loans. New Delhi: The Reserve Bank of India mandating banks to link certain loans to the external benchmark-based interest rate from 1 October is credit negative …

RBI external benchmark for bank loans credit negative: Moody's
5 years, 4 months ago

RBI external benchmark for bank loans credit negative: Moody's

The Quint  

Mumbai, Sep 10 Moody's Investor Service on Tuesday said the RBI's mandate on aligning commercial bank floating loan rates to the external benchmark from next month is credit negative for Indian banks. This will expose banks to asymmetrical movements in the cost of funding and loan yields, thus exposing them to interest rate risks," the US rating agency said in …

Linking retail loans with external benchmark: Banks may not sharply trim lending rates despite new RBI norms
5 years, 4 months ago

Linking retail loans with external benchmark: Banks may not sharply trim lending rates despite new RBI norms

Firstpost  

The RBI ordered all banks to link certain loans to the external benchmark based interest rate from 1 October, saying banks had not satisfactorily passed on the benefit of recent policy rate cuts to consumers. Mumbai: The Reserve Bank of India’s move to compel lenders to link all new floating rate retail loans to external benchmarks is unlikely to achieve …

Tracking India's economic slowdown: Narendra Modi govt has a herculean task ahead to pep up growth with dying private investment
5 years, 5 months ago

Tracking India's economic slowdown: Narendra Modi govt has a herculean task ahead to pep up growth with dying private investment

Firstpost  

There is more than enough evidence of the economy slowing down Editor’s note: This is the third part of a series in which Firstpost’s columnists analyse the ongoing economic slowdown and offer solutions. Between April 2014 and March 2019, the retail loans of banks went up by 120 percent. Between April 2009 and March 2014, the five-year period before the …

Opinion | Need a strategy that goes beyond interest rates
5 years, 5 months ago

Opinion | Need a strategy that goes beyond interest rates

Live Mint  

The factors that are slowing growth are piling up. Simply put, the liquidity problems in India’s non-banking financial companies are not going away any time soon, and gross domestic product growth is slowing due to a long list of domestic and international challenges. “Credit-less” recoveries are generally considered rare around the world given that it’s hard to fund growth without …

External benchmarks for retail loans can pose risk for banks, for now
5 years, 7 months ago

External benchmarks for retail loans can pose risk for banks, for now

Live Mint  

While retail loans like credit cards and personal loans are growing, consumers are concerned about banks not being able to pass on interest rate changes to them, especially in a falling interest rate regime. Growth in deposits has been slow, because of which banks have not been able to bring down deposit rates significantly. As banks are focused on growing …

NBFC liquidity crisis hits ’loans against property’ market in FY19
5 years, 8 months ago

NBFC liquidity crisis hits ’loans against property’ market in FY19

Live Mint  

A fall in recoveries due to weak property markets in metros, coupled with rising delinquencies, has led to weakening of the loans against property segment for financiers, a report said Monday. Other segments, especially commercial vehicle loans which were not doing so good recently, are showing signs of improvement, the report by domestic rating agency India Ratings said. Delinquency indices …

Bank aversion to NBFCs fuelled India’s liquidity crisis
6 years, 2 months ago

Bank aversion to NBFCs fuelled India’s liquidity crisis

Live Mint  

Mumbai: The liquidity crisis, which has become a bone of contention between the Reserve Bank of India and the government, has its roots in banks’ reluctance to lend to non-banking financial companies, according to bankers Mint spoke with. According to the chief financial officer of a leading public sector bank, lenders are wary of lending to certain NBFCs because of …

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