With the crude prices and Consumer price index (CPI)-based inflation moderating, market experts expect stability to return to the bond market.
RBI’s revised framework on how banks must recognise stress and provide for bad loans, is expected to hurt lenders. Analysts say it would increase reported NPAs of banks in coming quarters and increase their provisioning.
Year after year for the last nine years, India’s largest lender State Bank of India (SBI) has assured the market that the worst may be over in terms of bad loans. But the problem is far away from disappearing.
Persistent rise in bond yields is likely to shave Rs 30,500 crore from the banks' balance-sheets in the current financial year, with state-run lenders being the worst hit, warns a report.
In a bid to hasten the resolution of bad loans, RBI has tightened rules to make banks identify and tackle any non-payment of loan rapidly, a move the government said should act as a "wake up call" for defaulters.
The finance ministry has asked 12 listed public sector banks currently under the RBI's prompt corrective action (PCA) to apprise it on reform measures they have undertaken.
With the aim of improving the transmission of interest rates changes, the Reserve Bank of India (RBI) has decided to harmonise the methodology of determining benchmark rates by linking the Base Rate to the MCLR with effect from April 1 this year.
Public sector banks, including SBI, Bank of Baroda and IDBI Bank, plan to raise Rs 58,000 crore through equity dilution during the current fiscal to meet Basel-III norms and clean up their balance sheets.