India’s Leading BFSI Companies 2020
XVI Capital to Risk Weighted Assets Banks in major EMEs managed to build up capital buffers, with Indonesian banks maintaining the highest CRARs. Chinese banks strengthened their capital positions, particularly the small and medium sized ones. The capital position of Russian banks improved during 2018 but were lower than in other major EMEs. CRARs of banks in India improved on the back of capital infusion in public sector banks by the Government and capital raising efforts by private sector banks. Indian banking scenario After three quarters of fiscal 2020, uncertainties weigh on the Indian economy. After growing remarkably in fiscal 2019 and 2020. GDP growth rate falls to six year low of 4.5% in Q2FY20 and the country loses its tag of fastest growing major economy. RBI has cut its growth forecast to 5% in FY20, down by 110 bps from its October forecast. The global factors, which started to take place from the start of calendar year 2019 like heightened trade related uncertainties, volatile crude oil prices, policy normalization by central banks of advanced economies; and Brexit weighed down the economy. Central government took various steps to bring the GDP growth rate back on its path through means like lower corporate taxes for new manufacturing firms and infusion of liquidity through reserve funds of RBI. Despite this, stretch of turbulence unsettled financial markets, leaving in their wake currency depreciations, asset price volatility, reserve depletions and macroeconomic losses which impacted EMEs almost continuously in first three quarters of fiscal 2020. The weakening of growth impulses and subdued credit off-take are playing out, with sporadic credit default events and incidents of frauds exacerbating the reluctance to lend. This was evident in the slowdown of flow of resources, both from banks and non- banks to the commercial sector in the first H1FY20. All these factors are weighing on overall economic activities. Default and rating downgrades of a nonbanking financial company (NBFC) and a housing finance company (HFC) recently led to liquidity constraints and interruptions in their financial intermediation. Although their loan-loss provisions remain at comfortable levels. Trends in Credit and Deposit growth Trends in Credit and Deposit Growth (y-o-y) 0 4 8 12 16 20 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Deposit Credit Dun & Bradstreet
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