Loading...

Top
Help
×

By creating an account you can:

Logo TaxTMI
Call Us / Help / Feedback

Contact Us At :

E-mail: [email protected]

Call / WhatsApp at: +91 99117 96707

For more information, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters 0/2000
Make Most of Text Search
  1. Checkout this video tutorial: How to search effectively on TaxTMI.
  2. Put words in double quotes for exact word search, eg: "income tax"
  3. Avoid noise words such as : 'and, of, the, a'
  4. Sort by Relevance to get the most relevant document.
  5. Press Enter to add multiple terms/multiple phrases, and then click on Search to Search.
  6. Text Search
  7. The system will try to fetch results that contains ALL your words.
  8. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
  9. Text Search
Add to...
You have not created any category. Kindly create one to bookmark this item!
Create New Category
Hide
Title :
Description :
❮❮ Hide
Default View
Expand ❯❯
Close ✕
🔎 News - Adv. Search
TEXT SEARCH:

Press 'Enter' to add multiple search terms. Rules for Better Search

Search In:
Main Text + AI Text
  • Main Text
  • Main Text + AI Text
  • AI Text
Category: ?
Categorized by AI
---- All Categories ----
  • ---- All Categories ----
  • Income Tax
  • GST
  • Customs, DGFT & SEZ
  • FEMA & RBI
  • Corp. Laws, SEBI & IBC
  • PMLA, Black Money & ED
  • Budget
  • News and Press Release
  • PTI News
Month:
---- All Months ----
  • ---- All Months ----
  • January
  • February
  • March
  • April
  • May
  • June
  • July
  • August
  • September
  • October
  • November
  • December
Year:
---- All Years ----
  • ---- All Years ----
  • 2026
  • 2025
  • 2024
  • 2023
  • 2022
  • 2021
  • 2020
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015
  • 2014
  • 2013
  • 2012
  • 2011
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
Relevance Default Date
    Central Bureau of Narcotics (CBN) and PHARMEXCIL Sign Memorandum of Understanding to Boost Legitimate Pharmaceutical Exports and Strengthen Regulatory...
    RBI's USD-INR Swap Facility Sparks Unprecedented Forex Inflows into India, Banks Raise USD 73 Billion in eleven weeks
    Rupee falls 4 paise to 95.74 against US dollar in early trade
    Former cop Waze files fresh plea in Mumbai court, wants PMLA case against him dropped
    Rupee settles 1 paisa higher at 95.70 against US dollar
    Ontario's premier: Canada should be ready to cut electricity, critical minerals as trade woes worsen
    UIDAI, Army launch Aadhaar biometric update camps for students in Assam's Tamulpur
    J&K PCC chief opposes electricity tariff hike, demands immediate rollback
    Govt lifts ban on wheat exports to protect farmers interest amid depressed local prices
    FDA suspends licences of five food outlets on Mumbai Cricket Association premises
    Govt appoints ex-diplomat Akbaruddin, 2 other new members to RBI central board
    'Only 6.83 per cent after 4 years': Omar Abdullah defends J&K power tariff hike
    No sugar shortage in India, prices to ease in coming days following govt's measures: ISMA
    Govt lifts export ban on wheat and its products
    ED raids several places in UP, Haryana in GST fraud case; over Rs 1 crore cash seized
    From Syrup Diversion to Sugar Production: SED's Integrated Process House Solution for Shivshakti Sugars' 7,500 TCD Plant
    Chandigarh University Provides In-House Training for Civil Services, Defence, Management, Banking & PSUs
    ICSI inaugurates new Chapter Office in Hyderabad
    Curis Lifesciences Charts a New Growth Path with Uninova, Export Markets and Branded Pharma Expansion
    IBC @ Crossroads: A Decade of Evolution, The Road Ahead
❯❯
Maximize Maximize Maximize
0 / 200
Expand Note
Add to Folder

No Folders have been created

+

Are you sure you want to delete "My most important" ?

NOTE:

News
Showing Results for :
Reset Filters
Results Found:
Show All Summaries Hide All Summaries
August 25, 2026
Show AI Summary
Voluntary pharmaceutical export compliance framework promotes legitimate trade while safeguarding controlled substances through information sharing and coordinated capacity building.
The Memorandum of Understanding creates a cooperative framework for legitimate pharmaceutical exports and safeguards against diversion of narcotic drugs, psychotropic substances and controlled precursors. A voluntary, non-binding code of conduct will recommend industry practices without imposing obligations beyond applicable law. Cooperation includes identifying export bottlenecks, streamlining procedures for compliant exporters, capacity-building programmes, lawful and confidential information sharing, and nomination of company contact persons to coordinate voluntary compliance measures.
August 25, 2026
Show AI Summary
USD-INR forex swap facility accelerates foreign-currency mobilisation through non-resident deposits and institutional borrowing, strengthening India's external buffers.
USD-INR forex swap facility for FCNR(B) deposits, overseas foreign-currency borrowings and external commercial borrowings enabled banks to access foreign-currency funding through a special swap window. FCNR(B) deposits formed the principal component of the reported foreign-exchange inflows, reflecting participation by non-resident Indians. The FCNR(B) window was scheduled for early closure after the stated mobilisation objective was achieved ahead of schedule, and the inflows were presented as strengthening external buffers through long-term non-resident deposits and institutional funding.
August 25, 2026
Show AI Summary
Foreign-exchange intervention moderated rupee depreciation as crude prices, importer dollar demand and geopolitical uncertainty sustained currency-market pressure.
Foreign-exchange conditions reflected a marginal weakening of the rupee against the US dollar, influenced by elevated crude-oil prices, importer demand for dollars, weaker Asian equities and geopolitical uncertainty. The currency remained within a narrow trading band, with RBI dollar sales described as moderating sharper depreciation. The RBI's special USD-INR forex swap facility for FCNR(B) deposits, Overseas Foreign Currency Borrowings and External Commercial Borrowings mobilised substantial foreign-exchange inflows, indicating support from non-resident Indian participants.
August 24, 2026
Show AI Summary
Prior government sanction for public servants is contested as essential before money-laundering proceedings may validly proceed for official-duty acts.
Prior prosecution sanction is asserted to be a jurisdictional precondition for money-laundering proceedings against a public servant for acts connected with official duty. A former police officer challenges cognizance and process for want of sanction under the criminal procedure framework and the Maharashtra Police Act, relying on sanctions subsequently granted for co-accused public servants. The allegations concern collection of funds through the officer and their alleged laundering through an educational trust.
August 24, 2026
Show AI Summary
Rupee exchange-rate movement gained marginal support from foreign equity inflows despite crude oil, importer demand and geopolitical pressures.
Rupee exchange-rate movement against the US dollar reflected a marginal appreciation, supported by foreign fund inflows into domestic equities. Trading remained within a narrow range amid pressures from higher crude oil prices, continuing importer demand, and geopolitical concerns. Market conditions also included a stronger dollar index, lower Brent crude futures, domestic equity declines, and net foreign institutional investment. Elevated oil prices and geopolitical uncertainty indicated a slight negative bias, while possible US dollar weakness could support the rupee.
August 24, 2026
Show AI Summary
Retaliatory trade measures may target electricity, critical minerals and integrated automotive supply chains amid escalating cross-border tariff disputes.
Canada-United States trade relations involve escalating tariffs and contemplated reciprocal restrictions affecting goods, automotive production, electricity exports and critical-mineral supplies. Potential Canadian countermeasures include limiting or increasing the price of Ontario electricity exports and restricting supplies of critical minerals, with oil and potash also identified as possible leverage. The automotive sector faces particular exposure because Ontario production and supply chains are integrated with United States manufacturing. Negotiations also raised concern over limits on Canada's ability to conclude trade agreements with other countries without United States approval.
August 24, 2026
Show AI Summary
Mandatory biometric updates for students support continued Aadhaar authentication and access to education, scholarship and benefit-related services.
Mandatory Biometric Update camps have been launched in schools across Tamulpur district, Assam, for eligible students aged 5 to 17 years to update Aadhaar biometrics. Aadhaar biometrics require updating on attaining five years of age and again on attaining fifteen years. Timely updating supports continued Aadhaar authentication and helps avoid difficulties in accessing services where authentication is applicable, including school admissions, entrance-examination registration, scholarships and Direct Benefit Transfer schemes.
August 24, 2026
Show AI Summary
Electricity tariff affordability requires immediate review, withdrawal of higher consumer charges, and relief measures for economically weaker households.
Electricity tariff increase in Jammu and Kashmir has been opposed as imposing an unjustified and unaffordable financial burden on domestic consumers amid rising household costs. Immediate review and withdrawal of the increase are sought, together with measures to reduce electricity costs for domestic consumers, particularly economically weaker sections, and ensure affordable, reliable power supply.
August 24, 2026
Show AI Summary
Wheat export liberalisation replaces prohibitions to support farm prices while domestic stocks are expected to protect consumer supply.
Wheat and wheat-product exports are liberalised with immediate effect by revising their export policy from prohibited to free. The change covers wheat, wheat flour, maida, semolina and wholemeal atta, replacing the earlier export-ban framework and simplifying exports previously permitted through licences. The measure aims to support farmers amid depressed domestic prices, while adequate domestic availability and buffer stocks are expected to meet demand and moderate consumer prices.
August 24, 2026
Show AI Summary
Food safety compliance failures trigger licence suspensions for deficient hygiene, storage, refrigeration, sanitation and valid licensing practices.
Food safety enforcement measures resulted in suspension of food licences or registrations where establishments failed hygiene, food handling, storage, refrigeration, sanitation and licensing requirements. Deficiencies included unsafe temperature control, unclean refrigeration equipment, improper food storage and thawing, inadequate sanitisation, deteriorated or expired materials, deficient oil-quality checks, artificial colouring, pest infestation, cross-contamination risks and inadequate drainage. One outlet was also found to be operating under the name of an establishment without a valid food licence, resulting in suspension of its registration certificate.
August 24, 2026
Show AI Summary
Central Board Governance expands through appointments of part-time non-official directors for defined terms, alongside central bank and government representatives.
Appointments to the Reserve Bank of India's Central Board expand its part-time, non-official director membership. Syed Akbaruddin, Annie George Mathew and Janmejaya Kumar Sinha have been appointed for four years from 24 August 2026, or until further orders, whichever occurs earlier. The Central Board also includes the Governor, deputy governors, the economic affairs secretary and the financial services secretary.
August 24, 2026
Show AI Summary
Electricity tariff adjustment is linked to inflation and transmission losses, while free household units remain separately implemented.
Electricity tariff increase of 6.83 per cent after four years is presented as necessary in light of inflation and rising costs. Reducing transmission and distribution losses is identified as a means of limiting future tariff increases. Provision of 200 units of free electricity for poor and needy households through solar panels under the Muft Bijli Yojana is treated as distinct from tariff revisions.
August 24, 2026
Show AI Summary
Sugar supply management measures target speculative stockpiling through imports, stockholding limits and earlier crushing to moderate prices.
Sugar supply is characterised as adequate, and higher prices are attributed principally to speculative buying and advance stockpiling, alongside lower output, seasonal demand and global price pressures rather than an actual shortage. Duty-free raw sugar imports and stockholding limits are intended to augment availability, curb speculative accumulation and stabilise market sentiment. Imports, existing stocks, special crushing and an earlier crushing season are expected to moderate prices and improve festive-period supply. Ethanol diversion is not identified as a cause of the price movement.
August 24, 2026
Show AI Summary
Wheat export policy shifts to free trade, lifting restrictions on wheat flour, maida, semolina and wholemeal atta exports.
Wheat export policy has been revised from prohibited to free with immediate effect, lifting the export ban on wheat and related wheat products. The liberalised export treatment extends to wheat flour, maida, semolina and wholemeal atta. The restriction had been imposed to address rising domestic prices, and its removal is expected to improve international wheat availability.
August 24, 2026
Show AI Summary
Bogus input tax credit fraud investigation examines fabricated invoices, circular transactions, layered funds and alleged proceeds of crime.
Investigation into alleged bogus input tax credit fraud involved searches under the anti-money-laundering framework. The alleged scheme involved fabricated invoices and e-way bills without actual movement of goods, circular transactions, layered funds, cash withdrawals and bogus or non-existent entities. GST authorities identified fraudulent availment of input tax credit causing wrongful loss to the government exchequer. The investigation focused on tracing alleged proceeds of crime, identifying beneficiaries, and securing documentary and digital evidence.
August 24, 2026
Show AI Summary
Sugar crystallization process integration combines evaporator upgrades, continuous boiling, heat recovery and automation for efficient plantation white sugar production.
Sugar manufacturing process integration is proposed through strengthening an existing evaporator station and adding a sugar crystallization section to convert syrup production into plantation white sugar production. The scope covers design, engineering, equipment supply, erection and commissioning of condensate heaters, falling film evaporators, heat-recovery systems, continuous pans, vacuum systems and crystallizers. Continuous massecuite boiling will use chamber-specific control, while evaporator recirculation and online chemical-cleaning provisions support process control and low-grade vapour utilisation.
August 24, 2026
Show AI Summary
Competitive examination preparation supports career pathways in civil services, public employment, management, defence, research and international higher education.
Career-development and competitive-examination preparation is offered alongside academic programmes for civil services, government and public-sector employment, banking, engineering higher education, management, defence, teaching, research and overseas education. UPSC, SSC-CGL, Bank PO, GATE, CAT, CDS, UGC-NET, GRE, GMAT and IELTS preparation includes courses, workshops, mentorship, expert guidance and examination-specific resources. Access to examinations, admissions and career opportunities remains subject to applicable eligibility, selection and institutional criteria.
August 24, 2026
Show AI Summary
Corporate governance professionals gain expanded training infrastructure as Hyderabad's new Chapter Office supports Company Secretaries and students.
Institute of Company Secretaries of India has inaugurated a Chapter Office in Hyderabad to expand infrastructure for professional education, training, examinations, meetings, capacity-building programmes and stakeholder engagement. The facility is intended to support Company Secretaries and students and enable wider professional and educational activities. Company Secretaries are identified as corporate governance professionals, with expanding regulatory requirements and the formalisation and listing of micro, small and medium enterprises creating potential demand for qualified professionals.
August 24, 2026
Show AI Summary
Diversified pharmaceutical growth combines branded portfolio expansion, contract manufacturing, merchant exports, and regulatory registrations for international market development.
Curis Lifesciences Limited plans a diversified pharmaceutical strategy spanning domestic branded products, contract manufacturing and international market development. Its majority acquisition of Uninova Lifesciences is intended to strengthen own-brand marketing, distribution and portfolio expansion, including injectable products through third-party manufacturing. International initiatives include merchant exports in Kenya and a Nigerian joint venture pursuing own-brand regulatory registrations alongside contract-manufacturing and export opportunities. Commercial development in Nigeria remains contingent on relevant licences and purchase orders, while projections are subject to regulatory, market and other business factors.
August 24, 2026
Show AI Summary
Insolvency framework reform prioritises efficient resolution, value maximisation, stakeholder coordination, institutional strengthening and technology-enabled asset recovery.
Insolvency and Bankruptcy Code, 2016, entered its tenth year amid deliberations on legislative amendments, resolution timelines, stakeholder interests and value maximisation. Key areas included resolution plans and tax implications, liquidation processes, recent judicial developments, stakeholder coordination, and the roles of insolvency professionals, regulators, banking institutions and adjudicatory processes. Technological innovation, including artificial intelligence for asset tracing and recovery, alongside regulatory strengthening, capacity building and stakeholder collaboration, was emphasised for the future development of the insolvency ecosystem.

News

Back

All News

Showing Results for :
Reset Filters
No Records Found

News

Back

All News

Showing Results for : Reset Filters

Winning in Uncertain Times: The Indian Experience (Inaugural Speech by Shri Shaktikanta Das, Governor, Reserve Bank of India - November 22, 2023 - Delivered at the FIBAC 2023 Conference Organised Jointly by FICCI and IBA at Mumbai)

November 23, 2023

Contents
Summary
Note

Note

-

Bookmark

Print

Print

I am thankful to FICCI and IBA for once again inviting me to this FIBAC Conference.1 As momentous changes are taking place in the financial and business landscape, events like this provide an opportunity to industry leaders, bankers and policymakers to deliberate on issues of our times and crystallise our thoughts for future guidance. Today the world is grappling with an unending string of challenges since 2020. Geopolitical conflicts, geo-economic fragmentations, volatile commodity prices, uncertainty in trajectory of monetary policies and their macro-financial implications, increasing frequency and ferocity of climate shocks, all these prevailing together, present a very complicated or should I say, deadly mix of challenges. Historical regularities are looking improbable and policymakers are being put to test. In this backdrop, the theme of today’s conference – “winning in uncertain times” – aptly captures the long-standing quest of humanity to make progress against all odds and challenges. I am an optimist and I remain confident that we can work together and navigate through this stormy weather.

2. In tune with the theme of the conference, I would like to touch upon the Reserve Bank’s policies and actions in the last one and half years to maintain macroeconomic stability. I would then proceed to talk about India’s growth drivers and emerging opportunities that can be harnessed to enhance India’s potential growth. In the end, I propose to highlight certain key issues which merit the attention of banks, NBFCs, financial sector entities and even businesses.

The Conduct of Monetary Policy in the Year Gone By

3. The monetary policy actions of the Reserve Bank over the last one and half years consisting of prioritisation of inflation ahead of growth, narrowing the Liquidity Adjustment Facility (LAF) corridor, increasing the policy repo rate by 250 bps, draining out excess liquidity – together with supply side measures by the Government – have facilitated significant softening of headline inflation to 4.9 per cent in October 2023. The moderation in core inflation, in particular, is noteworthy.

4. There is also recent evidence of household inflation expectations becoming more anchored.2 Headline inflation, however, remains vulnerable to recurring and overlapping food price shocks coming from global factors and adverse weather events. The frequency and intensity of such shocks have increased in recent period. Monetary policy in such a scenario needs to remain watchful and actively disinflationary while supporting growth.

5. I must add that our actions over the past one and a half years did not engender any financial stability risks as witnessed in some advanced economies in the early part of 2023. This may be attributed to the regulatory requirements prescribed by the Reserve Bank which banks are expected to follow to manage their interest rate risk. These requirements act as safeguards for future stress that may arise when the upturn of the interest rate cycle takes place.3

6. On the exchange rate front, the Indian rupee (INR) has exhibited low volatility and orderly movements relative to peers despite elevated US treasury yields and a stronger US dollar.4 Movements in the INR are consistent with the strength of the underlying macro-fundamentals and the reassuring availability of buffers.

Growth Drivers and Opportunities

7. As many business leaders are present here, let me now dwell upon India’s growth drivers and the opportunities that lie ahead. The Indian economy rebounded strongly from the COVID-induced contraction of 5.8 per cent in 2020-21 to a growth of 9.1 per cent in 2021-22 and 7.2 per cent in 2022-23. India’s real GDP is expected to grow by 6.5 per cent in both 2023-24 and 2024-25, making it one of the fastest growing large economies in the world.5 In fact, India is already the third largest economy in the world in terms of purchasing power parity (PPP). Despite global slowdown, the Indian economy has remained resilient and continued to grow due to its higher reliance on domestic demand which enabled the economy to weather multiple global headwinds. Although India has made rapid strides in external openness through trade and financial channels and gained competitiveness, its dependence on domestic demand provides a cushion against external shocks. At the same time, various structural reforms implemented in areas of banking, taxation, inflation management and manufacturing sector, etc. over the last few years, have laid the foundation for sustainable and higher growth.

8. We have moved from an era of twin deficit and twin balance sheet stress to the current period of twin balance sheet advantage.6 While balance sheets of banks witnessed significant improvement on the back of improved asset quality and profitability, corporates also display stronger financials, having deleveraged their balance sheets. The improved health of the banks and corporates is also reflected in their recent second quarter results of 2023-24. The corporate performance parameters based on 1501 listed non-government non-financial companies suggest strong growth in profitability and staff costs in Q2:2023-24. The Reserve Bank’s latest industrial outlook survey indicates that business outlook further improved with manufacturing firms being optimistic about demand condition in Q3:2023-34. Capacity utilisation (CU) in the manufacturing sector, on a seasonally adjusted basis, continues to trend up, which augurs well for investment activity. The continued thrust on capex by the government is also favourable for investment activity. It is now for corporates and other businesses to evaluate the current situation and future potential of India and move forward.

9. On the supply side, the agriculture sector has kept good momentum over the last few years and its performance is expected to remain stable during 2023-24 despite uneven south-west monsoon and lower kharif production. Production of foodgrains as well as horticulture have reached record levels year after year. The diversification of exports, both in terms of products and destinations, is enhancing the economy’s capacity to withstand shocks. The agricultural sector continues to provide employment to a large part of our workforce.

10. There are, however, several challenges relating to productivity gaps, water usage and irrigation facilities, shifting consumer preferences and sudden weather events. All these require heavy investments in infrastructure and innovation to modernise the agricultural sector and realise its true potential for achieving higher productivity; more efficient access to markets; maximising farmers’ income; and increasing its contribution to GDP. As a nation we must find a way of carrying out certain reforms, especially in the area of agricultural marketing and the connected value chains. These reforms are critical not only for sustained high growth but also for durable price stability and to mitigate the frequency and intensity of food price shocks. It is important that private sector comes forward in a big way and becomes a crucial partner in this journey. There are opportunities for the private sector to invest in strategic areas of agriculture and allied activities such as supply chains; food processing involving variety of fruits, vegetables and food grains; scaling up dairy, poultry and fishing; and creating marketing infrastructure. Private sector can accelerate farm-firm (i.e., agri-industry) linkage and improve the efficiency of the entire value chain right up to the end customer.

11. As regards the manufacturing sector, even as its share in the economy has been around 17-18 per cent over the years, it has potential to accelerate its contribution to growth and employment. India’s demographic advantage with its young labour force also presents a unique opportunity to become a key player in global manufacturing. It is important for us to be part of the global supply chains which are undergoing realignments in the fragmented global economy. Initiatives like the production-linked incentive (PLI) scheme create conducive conditions to enhance the share of manufacturing in our GDP. Sectors such as smart phones, large-scale electronics, pharma, food processing, auto and auto components have recorded good performance under the PLI scheme. There is also huge potential in emerging areas such as aerospace and defence, low-carbon technologies, electric vehicles and semiconductors. Our efforts towards building robust public digital infrastructure, which is fostering digitisation and ease of doing transactions across the spectrum, will continue to provide strong fillip to technology adoption and productivity.

12. At present, the services sector contributes the largest share in India’s GDP and remains an anchor of overall growth. The Indian services sector is fast adopting new technologies such as artificial intelligence, internet of things, cloud computing and data analytics to improve service delivery, reach, and competitiveness. The newly emerging start-ups are also largely concentrated in the services sector. There is a steady shift from low-skill consumer-oriented services towards more technology-enabled business services. Indeed, there is a case for Indian businesses to recognise this undercurrent and work towards upscaling their activities to meet the external demand in this sector.

13. In fact, India commands a strong external position, thanks to the strength of our services exports, which have largely remained resilient. They have supported India’s current account deficit, even as merchandise exports have been under pressure in the face of weakening global demand. The current account deficit to GDP ratio has remained under 2 per cent for almost 10 years. India’s services exports are diversifying from information technology (IT) related services to other professional services such as business development, research and development, professional management, accountancy and legal services.

14. Overall, India’s growth journey with active participation of manufacturing and services sectors and dependence on domestic demand could be self-fulfilling in the years to come.

Some Reflections on Financial Sector Issues

15. Let me now turn to the financial sector. As the Indian economy strives to grow in an evolving and uncertain global environment, it is imperative that our financial sector remains strong. The Indian banking system continues to be resilient, backed by improved capital ratios, asset quality and robust earnings growth. The financial indicators of non-banking financial companies (NBFCs) are also in line with that of the banking system as per the latest available data. While banks and NBFCs are showing good performance now, sustaining it requires concerted efforts. In good times like these, banks and NBFCs need to reflect and introspect as to where potential risks could possibly originate. Now is the time for them to further strengthen their risk management practices and build additional buffers to face the situation, if the business cycle turns adverse.

16. On our part, the Reserve Bank of India has significantly strengthened its regulation and the supervision of banks, NBFCs and other regulated entities in recent years. We have also very recently announced a few macro prudential measures in the overall interest of sustainability. These measures are pre-emptive in nature. They are calibrated and targeted. It may be relevant to note that major growth drivers like loans for housing, vehicles and MSME sector have been excluded from these measures. We continue to focus on strengthening governance and assurance functions, ensuring effective risk management and robust lending practices. We are monitoring the supervised entities through various onsite and off-site tools, stress testing, vulnerability assessments, thematic studies, data dump analysis, etc. as part of our proactive and forward-looking supervisory approach. Banks, NBFCs and other financial entities must continue to do stress testing of their books. In fact, there is a strong case for companies in the real sector also to stress test their businesses and balance sheets. Many of them may already be doing so, but it would be desirable that many more also do this.

17. At the current juncture there may not be any immediate cause for worry, but to remain on top of things, Banks and NBFCs would be well advised to take certain precautionary measures. In this context, I would like to highlight four points.

18. First, while credit growth is accelerating in the current period, banks and NBFCs may take due care to ensure that credit growth at the overall, sectoral and sub-sectoral levels remain sustainable and all forms of exuberance are avoided. Expansion of the credit portfolio itself and pricing of the same should be in sync with the risks envisaged. Banks and NBFCs also need to further strengthen their asset liability management. They may give greater attention to their liabilities side. In certain cases, we have observed increased reliance on high cost short term bulk deposits while the tenure of the loans, both in retail and corporate loans, is getting elongated.

19. Second, given the increasing importance of non-bank financial companies (NBFCs) in the financial system,7 the increasing interconnectedness between banks and non-banks merits close attention. NBFCs are large net borrowers of funds from the financial system, with their exposure from the banks being the highest. Banks are also one of the key subscribers to the debentures and commercial papers issued by NBFCs. NBFCs also maintain borrowing relationships with multiple banks simultaneously. Needless to state that such concentrated linkages may create a contagion risk. Though the banks are well capitalised, they must constantly evaluate their exposure to NBFCs and the exposure of individual NBFCs to multiple banks. The NBFCs on their part should focus on broad basing their funding sources and reducing over-dependence on bank funding.

20. Third, microfinance has emerged as an important financial conduit to foster financial inclusion. As Micro Finance Institutions (MFIs) are catering to the marginalised clientele, they have to bear in mind the affordability and repayment capacity of the borrowers. Though the interest rates are deregulated, certain NBFCs-MFIs appear to be enjoying relatively higher net interest margins. It is indeed for micro finance lenders to ensure that the flexibility provided to them in setting interest rates is used judiciously. They are expected to ensure that interest rates are transparent and not usurious.

21. Fourth, the increased collaboration of Banks and NBFCs with FinTechs is facilitating introduction of innovative products and services and new business models. Digital technologies are offering a powerful medium to access banking and financial services. This has also brought down the operational costs and helped in enhancing the reach of financial services providers. An important aspect that merits attention in this context is with regard to model-based lending through analytics. Banks and NBFCs need to be careful in relying solely on pre-set algorithms as assumptions based on which the models are operated. These models should be robust and tested and re-tested periodically. They may require to be calibrated and re-calibrated from time to time based on the changing contours of the financial ecosystem and fresh information. It is necessary to be watchful of any undue risk build up in the system due to information gaps in these models, which may cause dilution of underwriting standards.

Concluding Observations

22. We are living in highly uncertain times in an interconnected world. New risks are emerging from time to time. New sources of risk are also coming up. In such a scenario, building up further on resilience would be the best insurance against shocks and uncertainties. This holds good for all businesses and financial entities. As I see many banking and corporate leaders in the audience, let me also stress that new opportunities are knocking at our doors. It is for us to capitalise on them. There has to greater focus on investment in capacity building, skilling of human resources and adoption of newer technology by all players. The international confidence on India’s prospects is at a new high; it is an opportune time to make this India’s moment and work towards strong, sustainable and inclusive growth.

Thank you, Namaskar!

-----

1 Federation of Indian Chambers of Commerce and Industry (FICCI) and Indian Banks Association (IBA).

2 Mooring of household inflation expectations has been underway since September 2022. Inflation expectations for three months ahead fell by 90 bps from 10.0 per cent (July 2023 round) to 9.1 per cent (September 2023 round) and by 40 bps for one year ahead from 10.3 per cent (July 2023 round) to 9.9 per cent (September 2023 round).

3 The capital and liquidity requirements in India are uniformly applied to all the scheduled commercial banks, irrespective of their asset size and exposure. Investment fluctuation reserves (IFR) have also been created in the banks. Valuation guidelines on available for sale (AFS) category of investment are stringent and follow a conservative approach.

4 As of November 20, 2023, the INR had depreciated (on calendar year basis) by 0.7 per cent against the dollar, performing well when compared to its EME peers including the Chinese yuan, the Thailand baht, the Vietnamese dong, Argentine peso and the Malaysian ringgit. It had appreciated by 12.4 per cent against the Japanese yen, while it depreciated by 2.7 per cent against Euro and by 3.7 per cent against the UK pound.

5 According to the International Monetary Fund (IMF), India will become the third-largest economy before 2030, with its GDP projected to surpass both Japan and Germany by 2026 and 2027, respectively. India is already the third largest economy in the world in terms of purchasing power parity (PPP) (with a share of 7 per cent of global GDP) after China and the USA (Source: IMF, World Economic Outlook (WEO) database).

6 While twin deficit refers to the situation when an economy suffers from both the fiscal deficit and the current account deficit, twin balance sheet stress is a scenario where banks are under severe stress and the corporates are overleveraged to the extent that they cannot repay their loans.

7 The widening presence of NBFCs is reflected in their increasing credit to GDP ratio - from 8.6 per cent to 12.3 per cent between 2012-13 and 2021-22.

Topics

Acts Income Tax