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News Update

Bank NPAs may hit 8.5 % by March

Bankfin Banking sector gross NPA at 7.6%, highest in 12 years; Expected to rise further to 8.5% by March 2017 Gross bad loans at commercial banks could increase to 8.5 per cent of total advances by March 2017, from 7.6 per cent in March 2016, according to a baseline scenario projection by the Reserve Bank of India (RBI) in its Financial Stability Report released on Tuesday. “The macro stress test suggests that under the baseline scenario, the gross NPA may rise to 8.5 per cent by March 2017,” the RBI noted in the report. “If the macro situation deteriorates in the future, the gross NPA ratio may increase further to 9.3 per cent by March 2017.”

Rise & Rise of Stressed Loans
The RBI's projections show the gross NPA of banking sector could go up to 8.5% by March 2017
In % Net NPA Gross NPA Stressed Assets " The stress in the banking sectors, which mirrors in the corporate sector,
has to be dealt with in order to revive credit growth
- Raghuram Ranjan ( RBI Governor)
March 2013 - 3.4 9.2
September 2013 2.3 4.2 10.2
March 2014 2.2 4.1 10
September 2014 2.5 4.5 10.7
March 2015 2.5 4.6 11.1
September 2015 2.8 5.1 11.3
March 2016 4.6 7.6 11.5

Future for Indian banking system bright despite NPAs 

Despite the ongoing stress, the Indian banking system is expected to be the world's third-biggest in the next decade. A Boston Consulting Group report pegs the Indian banking revenue pool at close to $400 billion by 2026. Private banks will continue to outshine as they continue to grab market share from foreign and state-run banks. 

Two independent valuations report must before sale of bad loan above Rs 50 crore: RBI to banks 

The Reserve Bank of India (RBI) tightened the screws on banks clean-up further by mandating that banks can subscribed only a limited amount of loans sold to asset reconstruction companies (ARC) and ordered two independent valuation where bad loans worth Rs 50 crores are being sold to ARCs. These measures could accelerate the sale and bring down the unrealistic price expectations that banks have. 

Financial services secretary calls for on-tap licensing for small banks

Financial Services Secretary Anjuly Chib Duggal today hinted at more "loosening of the window" for starting small finance and payments banks. Describing the domestic banking system as “"a very happening sector", Duggal said "since universal bank licences are on-tap now, we could look at further loosening of the window for starting small finance banks and payments banks”. This is expected to further deepen the ongoing financial inclusion drive so that more and more people could be brought under the formal banking system.

Strong banking system for supporting growth a top priority: Finance minister Arun Jaitley

Finance minister Arun Jaitley today said strengthening the banking system to support economic growth is "top priority" for the government now, and listed out a slew of regulatory and legislative changes which have been initiated for this. "The capacity of banks to support growth must never be allowed to dilute," he added.

Want insurance and don't have money? Soon, you may get premium funded by banks

The Insurance Regulatory and Development Authority of India (Irdai) is planning to come out with a discussion paper on premium financing, particularly for the non-life sector. Officials in the industry believe that this step would increase penetration of general insurance.

ICICI Bank launches Unified Payments Interface apps, more banks to follow shortly

ICICI Bank sector bank on Tuesday announced the launch of 'Unified Payments Interface' (UPI) on two of its customer facing mobile banking applications – 'Pockets' and 'iMobile'. UPI enables bank account holders (of banks participating in UPI) to send and receive money using a Virtual Payment Address (VPA) without entering additional bank account details. More banks are expected to announce their UPI enabled app soon. The National Payments Corporation of India had last week announced the 21 banks would go live with UPI shortly.

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