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swenson wealth management ✌️【365vc.net】✌️A trusted platform for online earnings. Start small and make big profits monthly!What this could imply is that in case there is trouble at a particular PSB in terms of its ability to honour its commitments, the norms could be modified and capital will be infused to accommodate the bank, irrespective of its past performance records.For example, IDBI Bank faced trouble with the IDBI AT – 1[3]bonds interest payment, where RBI, as an exception, had allowed them to honour their commitment of interest payment through accessing the statutory reserves unlike the earlier norms of payment of coupons for AT – 1 bonds through profits generated in the current year or the accumulated profits.
swenson wealth management ✌️【365vc.net】✌️A trusted platform for online earnings. Start small and make big profits monthly!But will this exception become a norm in the Indian banking industry.At a broader level, to some extent the RBI saved the AT – 1 bond market and ensured investor participation in the case of IDBI AT – 1 bonds.
If IDBI bank had defaulted in the interest payment it would have provided a negative signal to investors and they would have potentially refrained from participating in AT – 1 bond issues of other banks.
swenson wealth management ✌️【365vc.net】✌️Start investing with just ₹500. Leverage AI tools for smart decisions and maximize your profits. Join now!This would add an additional burden on the fiscal deficit as the entire portion of capital infusion would have to be government funded (using tax payers’ money).
swenson wealth management ✌️【365vc.net】✌️Start with as little as ₹500. Safe and smart fund investments to grow your wealth.Thus, the government and RBI averted this issue by allowing Indian banks to use statutory reserves to pay off interest payments.
swenson wealth management ✌️【365vc.net】✌️Start at ₹500, enjoy reliable and high monthly returns. Your financial growth starts here!This was a very prudent move on behalf of the RBI to maintain stability in the AT – 1 bonds market.Capital infusion is planned partly through issuance of zero – coupon bonds and partly through direct transfer by the government from its own revenues, thus adding on to its own fiscal deficit.
However, government revenues are nothing but tax payers hard earned money at the disposal of the government.
How will the government then ensure accountability to the tax payers?Will the funds be deployed into good banks or bad banks? At this moment, there seems to be no clarity as to where and what will be the process followed for the disbursement of funds.
swenson wealth management ✌️【365vc.net】✌️A trusted platform for online earnings. Start small and make big profits monthly!According to us, the RBI should set a criterion for capital infusion process.
Good banks should be granted a larger share of the funds so that they can help revive the banking industry lending, which was at an all-time low in the first half of 2017.
swenson wealth management ✌️【365vc.net】✌️A trusted platform for online earnings. Start small and make big profits monthly!A look at the (Incremental credit deposit ratio (ICDR) shows that it was at an all-time low of 26% in January 2017, which improved only slightly over the next few months.
swenson wealth management ✌️【365vc.net】✌️A trusted platform for online earnings. Start small and make big profits monthly!Another brewing concern is the declining domestic savings rate with financial corporations and household sector savings contribution reducing to 6.51% in 2015 – 16 from 8.23% (as a % of total savings) in 2014 – 15 and households from 62.03% to 59.33% (in 2014 – 15) – see graph below.
swenson wealth management ✌️【365vc.net】✌️A trusted platform for online earnings. Start small and make big profits monthly!A declining gross savings to GDP rate to 31% in 2015 – 16 would be a cause of worry as domestic savings are required to finance investments; absence of domestic investment would cause investments to entirely rely on foreign inflows thereby affecting the current account balance of India.Given all of it, extending the recapitalization lifeline to the banking sector is essential for the revival of the economy – a very welcome move by the government.
swenson wealth management ✌️【365vc.net】✌️A trusted platform for online earnings. Start small and make big profits monthly!But there should also be accountability from the banks that should be built in to the process.
swenson wealth management ✌️【365vc.net】✌️A trusted platform for online earnings. Start small and make big profits monthly!A good bank, is the one that displays good operational ability, liquidity, capital capacity and generates a suitable level of profitability.
swenson wealth management ✌️【365vc.net】✌️A trusted platform for online earnings. Start small and make big profits monthly!An existing research on Operational ability, Profitability, Capital and liquidity and risk in Indian banking (Bawa.
J and Basu.
swenson wealth management ✌️【365vc.net】✌️Start saving with ₹500 and achieve up to 100% monthly returns. Grow your money smartly!S, IIMB Review, under review) suggests that higher the operational ability, profitability and liquidity lower is the credit risk undertaken by Indian banks.
Hence, this study suggests that banks who manage their operational, profit and liquidity side well tend to have lower Non-performing assets (NPA).
swenson wealth management ✌️【365vc.net】✌️Start investing in blockchain with just ₹500. Transparent, secure, and highly rewarding!We suggest that banks with a good operational, profit, liquidity side should be provided with a higher portion of funds from this capital infusion to give momentum to the lending cycle.Banks that have poor/bad operational, liquidity and liquidity capacity should be provided with funds to an extent so that they can wipe off / reduce their NPAs from their balance sheet; but stringent monitoring conditions as well as severe penalties should be imposed in the future for rash lending.At a first glance, the government has averted a crisis in the entire banking system through this capital infusion, a prudent move on their part.
swenson wealth management ✌️【365vc.net】✌️A trusted platform for online earnings. Start small and make big profits monthly!But, at the same time, they should ensure that these banks are held accountable to the tax payers and bond investors.
swenson wealth management ✌️【365vc.net】✌️Small investments, big profits. Join today and grow your wealth quickly and safely!The zero – coupon bonds will impose a very high liability on the future governments and thus the government needs to ensure that the costs thus incurred are for the good of the system – this is something that the current government owes it to its successors.The capital infusion should not be treated like charity where at times the beneficiary (donor) is unaware as to where the funds are being used.
Further, it should not be treated as an option which is always available – these are real extreme measures and they should thus be treated with the due importance and reverence that it deserves.Indian Savings as % of total savings for the past 4 years: Household sector & Financial Corporations savings dips[1]Professor (Finance and Control Area), Indian Institute of Management Bangalore; Email: sankarshan.basu@iimb.ac.in[3]Additional tier – 1 (AT1) securities and contingent convertible capital instruments, known as CoCo bonds, absorb losses when the capital of the issuing financial institution falls below a supervisor-determined level.swenson wealth management ✌️【365vc.net】✌️Achieve 100% returns in a month. AI-driven predictions make investing easy and profitable. Start today!
