Nifty99000 100%

Sensex99000 100%

Article rating: No rating
Article rating: 4.8
Article rating: 5.0
Article rating: 3.0
Article rating: No rating
Article rating: 5.0
Article rating: No rating
Article rating: No rating
Article rating: 4.5
Article rating: No rating
Article rating: No rating
Article rating: 4.2
Article rating: 5.0
Article rating: 4.0
Article rating: No rating
Article rating: No rating


Indian economy to improve in Q1, funds’ cost may rise: CII-IBA

Author: S Vijaykrishnan/Sunday, May 21, 2017/Categories: Economy

Indian economy to improve in Q1, funds’ cost may rise: CII-IBA

New Delhi, (IANS) The Indian economy is poised to experience improvement in overall conditions during the ongoing first quarter owing to better external financial linkages, and growth in both funds available as well as domestic economic activity, industry chamber CII said on Sunday citing its survey.

 "The CII-IBA Financial Conditions Index at 56.9 for Q1 (April-June) FY 2017-18 reflects positive outlook in the overall financial condition in the Indian economy as compared to the previous quarter (48) owing to the expectation of improvement in the overall financial conditions in the economy on account of growth of External Financial Linkages, Funding Liquidity Index and Economic Activity Index," a statement here said. 
 The Confederation of Indian Industry (CII)-Indian Banks Association (IBA) joint survey of 31 banks and financial institutions, however, also anticipates the cost of funds to rise due to tightening of liquidity in the near future.
 "The Cost of Funds Index with a standing at 40.3 witnessed deterioration from 66 in the previous quarter. Majority of the respondents expected increase in the interest rate," CII said. 
 "The improvement of Financial Conditions Index projects overall optimism in the Indian financial sector on the back of increase in consumption, infrastructure spending amplified by slew of landmark reforms as evidenced by roll out of GST and formulation of the stressed loans resolution package through an ordinance by amending the Banking Regulation Act," CII  Director General Chandrajit Banerjee said.
 The Reserve Bank of India has recently been empowered to issue directions to commercial banks to initiate insolvency proceedings for recovering bad loans. 
 The non-performing assets (NPAs), or bad loans, of state-run banks at the end of last September rose to Rs 6.3 lakh crore (almost $100 billion), as compared to Rs 5.5 lakh crore at the end of June 2016.
 The 31 major banks and financial institutions surveyed have combined total assets of more than Rs 60 lakh crore.
 The industry body's survey said the marginal cost of funds lending rates (MCLR) have seen minimal reduction across banks even though there is surplus liquidity in the market and rate cuts on deposits.
 The external financial linkages index was recorded at 59.3, the second highest value among the sub-indices, registering significant improvement from the previous quarter (35.3), that shows the Indian financial sector remained "unperturbed" from the effects of the US Federal Reserve's latest interest rate hike, CII said.
 The funding liquidity index was recorded at 72.2, third highest value among the sub-indices, recording improvement from the previous quarter (59.3), it added. 
 The number is significantly higher than the 50 mark, signalling a strong expectation of improvement in the funding liquidity in the Indian financial system. 
 "Funding liquidity index has shown the maximum upward movement indicating the liquidity position would be comfortable and banks are in a position to meet the credit demands of the productive and needy sectors," Indian Banks Association Chairman Rajeev Rishi said in the statement. 

Print Rate this article:
No rating

Number of views (228)/Comments (0)

S Vijaykrishnan
S Vijaykrishnan

S Vijaykrishnan

Other posts by S Vijaykrishnan
Contact author

Leave a comment

Add comment



Ask the Finapolis.

I'm not a robot
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest



The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free