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Quick takeaways from events related to BFSI space
* RBI not in favour of special credit window for NBFCs RBI is not in favour of providing special credit window to the NBFC sector to tide over the liquidity crunch as the cash crunch phenomenon is not systemic. Industry players and government think-tank NITI Aayog made a case for giving special credit window for non-banking financial companies (NBFCs) facing liquidity crunch following default by group of companies of IL&FS since Sept’18. Many NBFCs, including DHFL and Indiabulls Finance, came under severe liquidity pressure compelling them to bring down their reliance on commercial papers.
* Public sector banks recover Rs 1.2 lakh cr from bad loans in 2018-19 Public sector banks have recovered close to Rs 1.2tn from stressed assets during the financial ended March, primarily helped by resolution under the Insolvency and Bankruptcy Code (IBC). During the first half of the previous fiscal, banks recovered Rs 607.1bn from bad loans. Due to non-resolution of some big accounts referred under NCLT (National Company Law Tribunal), PSBs could not achieve the resolution target of Rs 1.80tn
* Mobile-first approach: UPI transaction values beat cards in every month of Q4 According to NPCI and RBI data, the aggregate value of Unified Payments Interface (UPI) transactions crossed that of credit and debit card transactions in Jan’19 and remained higher through the first three months of 2019. In Jan’19, the value of UPI transactions stood at Rs 1.09tn, higher than Rs 1.05tn worth of transactions recorded by the cards. The numbers in February were Rs 1.07tn for UPI and Rs 939.9bn for cards. In March, both modes of transactions crossed the Rs 1tn mark, with UPI clocking Rs 1.33tn and cards notching up Rs 1.11tn in transaction value
* Slow income growth impending deposit growth: RBI study According to a study by RBI, Decelerating income growth is the most important among the factors responsible for the slowdown in deposit mobilisation of the banking system. The co-movement of deposit growth with the growth of nominal GDP is stronger than with the deposit interest rate, as per the study.
* NBFC liquidity crisis hits ‘loans against property’ market in FY19 As per a study conducted by India Ratings, a fall in recoveries due to weak property markets in metros, coupled with rising delinquencies, has led to weakening of the loans against property (LAP) segment for financiers. Other segments, especially commercial vehicle loans which were not doing so good recently, are showing signs of improvement. Delinquency indices for the LAP transactions rated by the agency have been on the rise and the 90-day overdue loans rising to 1.77% in January from 1.05% in the year-ago period.
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