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
    Europe emerges top destination for India's electric car shipments in Q1
    Govt sets LPG production targets for refiners; Reliance gets largest quota
    PM urges MSMEs to tap opportunities from FTAs
    PM urges farmers to adopt 'chemical-free farming' to tap rising global demand for such food items
    Govt rolls out foreign asset disclosure scheme for small taxpayers
    Need one or two Indian pharma firms to be among global top 5: PM Modi
    Small taxpayers with€™ foreign assets to face 30 pc tax plus penalty; disclosure scheme opens till Dec 31
    PM urges MSMEs to tap opportunities from FTAs
    Govt cuts windfall gains tax on petrol, diesel, ATF exports
    Modi warns of weaponisation of resources, sea routes; urges energy self-reliance
    Current account deficit widens to USD 6.2 bn in Jun: RBI data
    Concessional swap facility attracts USD 56.85 bn forex inflows: RBI
    DFS Highlights Mechanism for Timely Redressal of Insurance Policyholders’ Grievances
    Forex kitty jumps USD 14.14 bn to USD 707 bn in one of the biggest weekly expansions
    PROVISIONAL ESTIMATES OF WHOLESALE PRICE INDEX, OUTPUT PRODUCER PRICE INDEX, AND TRIAL INPUT PRODUCER PRICE INDEX FOR THE MONTH OF JULY 2026, AND FINA...
    Logistics Data Bank Tracks 10 Crore EXIM Containers, Provides Visibility across Logistics Chain
    APEDA and Government of Tripura Organise International Organic Buyer-Seller Meet to Expand Global Market Linkages
    WPI inflation eases to 9.78 pc in July on softening in fuel prices
    IDFC FIRST Bank secures its first international rating with Investment Grade from S&P Global Ratings
    DRI busts illegal drug manufacturing facility in Jewar, UP; 30 kg drugs seized and two persons arrested
❯❯
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 16, 2026
Show AI Summary
Electric vehicle export diversification strengthens India's presence across European, Asia-Pacific and Latin American markets through expanding overseas demand.
India's electric motor car exports expanded sharply in the first quarter of 2026-27, reflecting increased international acceptance and competitiveness of India-manufactured electric vehicles. Europe became the principal export destination, led by Spain and the United Kingdom, with further demand across several European markets. Exports also reached Asia-Pacific markets, Nepal and emerging Latin American destinations. This wider market presence reflects improving quality and safety standards, stronger integration into global electric-vehicle supply chains, and diversification of India's electric-vehicle export profile.
August 16, 2026
Show AI Summary
LPG production preparedness requires refiners and upstream producers to maintain capacity and increase output during supply constraints.
Government has established a standing LPG production preparedness framework under which refining companies, oil marketing companies and upstream producers may be directed to increase production during supply constraints. Companies must maintain adequate LPG storage, evacuation and transportation infrastructure and pursue technically and economically feasible production-enhancing measures. Written directions may prescribe production quantities and periods, including restrictions on alternative uses of input streams required for LPG. The production schedule is updated twice yearly to reflect new facilities and added capacity from infrastructure, technology and distribution improvements.
August 16, 2026
Show AI Summary
Free trade agreement market access requires MSMEs, farmers and exporters to meet global quality standards.
Free trade agreements expand market-access opportunities for Indian MSMEs, exporters and producers through reduced or eliminated import duties on traded goods. Textiles, machinery, medicines, seafood and agricultural products can access international markets where they meet global standards and remain competitively priced. Farmers and producers are encouraged to develop export-oriented products, including chemical-free agricultural produce, while MSMEs may use preferential trade access to support manufacturing, exports, employment and growth.
August 15, 2026
Show AI Summary
Chemical-free farming can strengthen agricultural exports by meeting global standards and responding to rising international demand.
Chemical-free farming is urged to meet growing global demand and expand agricultural exports. Agricultural products must meet global parameters to facilitate access to international markets, including markets opened through free trade agreements. Food processing, export-oriented farm production, and global branding of traditional cuisine, millets, spices, fruits and flowers are identified as important elements of agriculture and food production policy.
August 15, 2026
Show AI Summary
Voluntary foreign asset disclosure allows eligible taxpayers to regularise overseas holdings with immunity from further tax, penalties and prosecution.
FAST-DS permits eligible taxpayers to disclose specified undisclosed foreign assets, foreign income, and foreign assets omitted from return schedules. Undisclosed assets or income not previously offered to tax may be declared up to Rs 1 crore on payment of an effective 60 per cent levy, based on fair market value as of 31 March 2026. Assets already offered to tax, or acquired during non-resident status but omitted from the return schedule, may be declared up to Rs 5 crore on payment of a fee. Valid declarations provide immunity from further tax, penalty and prosecution, while declared amounts are excluded from total income.
August 15, 2026
Show AI Summary
Global pharmaceutical leadership is urged through Indian firms achieving top-five status, supported by generic manufacturing and export capacity.
Indian pharmaceutical companies are urged to attain representation among the world's five leading pharmaceutical firms, despite India's established position as a major producer of generic medicines. India has a broad manufacturing base, supplies generic medicines across numerous therapeutic categories, and exports to worldwide markets including highly regulated jurisdictions. Although pharmaceutical exports and the domestic market have expanded, Indian firms have not yet secured positions among the largest global companies. Greater international scale may be supported through acquisitions and expanded established-brand and branded-generic operations.
August 15, 2026
Show AI Summary
Foreign asset voluntary disclosure permits eligible small taxpayers to regularise qualifying assets through tax, additional levy, and statutory immunity.
FAST-DS permits eligible small taxpayers to voluntarily disclose specified foreign assets or foreign income. It covers undisclosed foreign assets or income not offered to tax, subject to an aggregate value threshold of Rs 1 crore, and certain foreign assets omitted from the relevant return schedule, subject to a Rs 5 crore threshold and prescribed fee. Payment comprises 30 per cent tax and an additional equal amount. Disclosed income or investment is excluded from total income, with immunity from further tax, penalty and prosecution under the Black Money Act for the disclosed asset or income.
August 15, 2026
Show AI Summary
Free trade agreement opportunities require MSMEs to meet global standards and expand exports across textiles, machinery, medicines and seafood.
Free trade agreements are presented as export-market opportunities for Indian MSMEs because they reduce or eliminate import duties on a substantial range of traded goods. MSMEs are urged to expand exports of textiles, machinery, medicines and seafood, including shrimp, by meeting global quality standards and offering products competitively. Their export role is linked to self-reliance and their significant contribution to manufacturing, exports, GDP and employment.
August 15, 2026
Show AI Summary
Windfall gains tax on petroleum exports was reduced to support domestic fuel availability and limit export price advantages.
Special additional excise duty (windfall gains tax) on exports of petrol, diesel and aviation turbine fuel was reduced from 15 August 2026. Petrol export duty was reduced to nil, and export-duty rates on diesel and ATF were lowered. Duty rates for petrol and diesel cleared for domestic consumption remained unchanged. The export-duty framework seeks to maintain domestic petroleum-product availability and limit export advantages arising from higher global crude oil prices amid West Asia tensions.
August 15, 2026
Show AI Summary
Energy self-reliance drives diversified fuel sourcing, expanded offshore exploration, and domestic capacity to reduce geopolitical supply vulnerability.
Energy security policy seeks to reduce exposure to geopolitical pressure and supply disruption caused by dependence on overseas fuel and strategic maritime routes. India is diversifying crude oil and LNG sourcing while strengthening domestic hydrocarbon production through offshore exploration, seismic surveys, exploratory drilling and shared infrastructure. Expanded access to sedimentary basins is intended to unlock domestic oil and gas resources. Wider piped natural gas coverage, solar generation, critical-mineral exploration, and nuclear and other non-fossil energy sources support the broader objective of energy self-reliance.
August 14, 2026
Show AI Summary
Current account deficit widened as merchandise trade imbalance expanded, despite stronger services surplus, transfers, and positive capital inflows.
India's current account deficit widened in June 2026, principally because merchandise imports increased faster than exports and expanded the merchandise trade deficit. A higher services surplus, increased net transfers and a narrower net income deficit provided partial offsets. Net capital inflows, including foreign direct investment and foreign portfolio investment, supported a positive overall monthly balance. During the April-June quarter, despite increased services surplus and net transfers, the overall balance shifted to a deficit as the merchandise trade deficit widened.
August 14, 2026
Show AI Summary
Concessional foreign-currency swap facility closes early for new FCNR(B) deposits while ECB and OFCB access remains available.
The concessional swap facility for FCNR(B) deposits encourages foreign-currency inflows and supports foreign-exchange liquidity. New FCNR(B) deposits eligible for the facility must be mobilised by 31 August 2026, while swaps for eligible deposits may be availed until 11 September 2026. The swap arrangement for External Commercial Borrowings and Overseas Foreign Currency Borrowings remains available until 31 December 2026.
August 14, 2026
Show AI Summary
Insurance grievance redressal requires initial insurer complaint, prompt acknowledgement, and escalation through integrated monitoring channels when resolution remains unsatisfactory.
Insurance policyholder grievances must first be raised with the concerned insurer, whose Grievance Redressal Officer and Board-level monitoring committee oversee redressal. Complaints received through digital channels, correspondence or call centres are recorded in the insurer's Complaints Management System, integrated with Bima Bharosa. Insurers must acknowledge complaints immediately and resolve them within 14 days. Where no response is received within a reasonable period or the response is unsatisfactory, policyholders may escalate through Bima Bharosa or designated helplines, email or physical correspondence.
August 14, 2026
Show AI Summary
Foreign exchange reserve growth reflects increases in foreign currency assets, gold holdings, special drawing rights, and IMF reserve position.
India's foreign exchange reserves rose to USD 707.002 billion for the week ended 7 August 2026. The increase comprised higher foreign currency assets, gold reserves, special drawing rights and the reserve position with the IMF. Foreign currency asset valuation incorporates appreciation or depreciation of non-US currencies held in reserve assets. Measures including the FCNR(B) scheme were introduced to attract additional foreign exchange inflows.
August 14, 2026
Show AI Summary
Wholesale and producer price indices show July inflation movements, provisional estimates, final revisions, and manufacturing input-price trends.
Wholesale Price Index, Output Producer Price Index, and trial Input Producer Price Index estimates under the 2022-23 base-year series set out provisional July 2026 measures and final May 2026 revisions. All-commodities WPI stood at 110.0 in July 2026, with year-on-year inflation of 9.78 per cent. The all-commodities Output PPI was unchanged at 109.9, while the trial Input PPI for manufacturing was provisionally estimated at 105.9. Final May WPI, Output PPI and trial Input PPI measures were revised from their respective provisional estimates.
August 14, 2026
Show AI Summary
Logistics data visibility enables EXIM container tracking, operational analytics and multimodal shipment monitoring across India's logistics chain.
Logistics Data Bank provides near real-time visibility of India's EXIM container movement through technology-based tracking and stakeholder monitoring tools. RFID-based coverage extends across ports, terminals, inland logistics facilities, rail networks, industrial zones, borders and highways. The platform uses RFID, Internet of Things, Big Data and Cloud technologies, with analytics on dwell time, transit time, and port and terminal performance to identify logistics bottlenecks. LDB 2.0 adds high-seas tracking of export containers and multimodal shipment visibility.
August 14, 2026
Show AI Summary
International organic buyer-seller linkages support Tripura producers through direct sourcing engagement, market access and sustainable export opportunities.
International Organic Buyer-Seller Meet in Tripura created a direct platform for organic producers, Farmer Producer Organisations, exporters and international buyers to explore sourcing opportunities, market requirements and long-term commercial linkages. Organic and naturally produced goods, including Queen Pineapple, GI-tagged Kalikhasa Rice, organic ginger and turmeric, black sesame, jackfruit and scented lemon, were showcased through product displays and producer interactions. The initiative seeks to strengthen global market access, sourcing partnerships and income opportunities for organic farmers.
August 14, 2026
Show AI Summary
Wholesale price inflation moderation was driven by softer fuel prices, while manufactured goods and primary articles recorded higher inflation.
Wholesale price inflation moderated in July, led by a decline in fuel and power inflation and a marginal easing in food-article inflation. Inflation in manufactured products and primary articles increased, making the moderation uneven across groups. Mineral oils, food articles, basic metals, non-food articles, food products, and chemical products remained significant inflation drivers. The output Producer Price Index remained unchanged year-on-year, with lower manufacturing and mining inflation offset by higher agriculture and electricity producer-price inflation.
August 14, 2026
Show AI Summary
International investment-grade issuer ratings support expanded foreign-currency funding, trade finance, correspondent banking and cross-border financial market access.
IDFC FIRST Bank's inaugural international investment-grade issuer credit ratings, with a stable outlook, are expected to improve access to international funding markets and global financial counterparties. The rating is intended to support standby letter of credit lines, foreign-currency funding through its GIFT City International Banking Unit, mobilisation of FCNR(B) deposits, correspondent banking relationships and cross-border trade finance. Strong capitalisation, improving profitability, stable asset quality and a granular retail funding profile underpin the outlook.
August 14, 2026
Show AI Summary
Clandestine psychotropic drug manufacturing faces enforcement targeting precursor chemicals, concealed laboratories, illicit production networks and trafficking operations.
Enforcement action against clandestine manufacture of psychotropic substances led to the detection of a residential drug-production facility. Searches recovered amphetamine and intermediary forms, precursor chemicals, reagents, raw materials, and manufacturing equipment. Field testing indicated the presence of amphetamine, a psychotropic substance regulated under the Narcotic Drugs and Psychotropic Substances Act, 1985. The recovered apparatus and materials indicated illicit manufacture, while preliminary investigation pointed to short-term, intermittently operated facilities intended to conceal production activities.

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