Tag: banking sector

Markets have been trading sideways ahead of the meetings of the two major global central banks – the US Federal Reserve and the Reserve Bank of India (RBI) – over the next couple of weeks. Market experts expect natural profit-taking to happen with rising markets, but do not see any meaningful correction unless there is a more aggressive taper stance by the US Fed. They are cautiously optimistic on markets for 2021, on surplus global liquidity, and benign interest rates. The US Federal Reserve (US Fed), prior to the pandemic, had an outstanding balance sheet size of $4.2 trillion as of December 2019, which doubled in size to $8.3 trillion. Likewise, the European Central Bank (ECB), which had a pre-pandemic balance sheet size of 4.7 trillion euros also saw a similar proportional increase in size to 8.2 trillion euros. This liquidity is providing support to asset inflation in high-risk asset classes, including emerging equities like India. Read more

The announcement of Reserve Bank of India(RBI) a fresh round of restructuring of loans for individual and small borrowers for up to two years is a start of a possible long-drawn battle, say analysts who hailed the timely action by the central bank but fell short of giving a verdict on the impact on the sector. The possible impact on the banking sector of the announcements is difficult to be assessed at the moment as the Covid-19 situation remains precarious, they say. “The RBI has done something, to begin with, which addresses the concerns of, both, the lenders and the borrowers because of the uncertainty due to the rising cases and subsequent lockdowns,” says an expert. He also adds that to pre-empt the situation and comment on the impact is extremely difficult right now because we don’t know how long the local lockdowns will stay or whether the vaccination drive will pick up sooner than expected to improve the economic situation.