INSIGHTS FROM RBI'S ANNUAL REPORT ON TREND PROGRESS IN BANKING FY2021
Global Banking Trends:
1. Moderation in systematic importance of major global banks (positive)
- As per BASEL III norms, banks are categorised as systematically important to the global financial system based on their GSIB score. Higher the score, higher is the interdependence and riskiness of the bank. Since 2014, major banks have moderated their interdependencies and reduced their GSIB scores. This is a positive trend to ensure better global financial stability.
| PSB | PVB | FB | SFB | PB | NBFC | HFC | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| FY20 | FY21 | FY20 | FY21 | FY20 | FY21 | FY20 | FY21 | FY20 | FY21 | FY20 | FY21 | FY20 | FY21 | |
| Public Deposits (Rs Lakh Cr) | 90.5 | 99 | 41.6 | 48 | 6.8 | 7.8 | 0.8 | 1.1 | 0.01 | 0.025 | 0.5 | 0.6 | 1.2 | 1.3 |
| Loan and Advances | 61.6 | 63.5 | 36.2 | 39.4 | 4.3 | 4.2 | 0.9 | 1.1 | NA | NA | 24.6 | 27 | 11.8 | 12.8 |
| Loan Duration >3yrs (% of total loans) | 34.0 | 38.4 | 34.1 | 33.7 | 19.2 | 21.9 | 19.4 | 24.2 | NA | NA | NA | NA | NA | NA |
| Net Interest Margin | 2.4 | 2.5 | 3.4 | 3.6 | 3.3 | 3.3 | 8.3 | 7 | 1.9 | 1.6 | 6 | 5.7 | NA | NA |
| Cost of Funds (%) | 4.9 | 4.2 | 5.4 | 4.5 | 3.7 | 2.5 | 8.7 | 7.3 | 1.6 | 3.1 | NA | NA | NA | NA |
| Standard Assets (% of all assets) | 89.2 | 90.6 | 94.9 | 95.3 | 97.7 | 97.6 | 98.1 | 94.6 | NA | NA | 93.7 | 94.0 | ||
| CRAR (% of statutory requirement) | 143 | 156 | 183 | 204 | 197 | 217 | NA | NA | NA | NA | 153 | 177 | NA | NA |
| PSB | PVB | FB | SFB | PB | NBFC | HFC | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| FY20 | FY21 | FY20 | FY21 | FY20 | FY21 | FY20 | FY21 | FY20 | FY21 | FY20 | FY21 | FY20 | FY21 | |
| Public Deposits (Rs Lakh Cr) | 90.5 | 99 | 41.6 | 48 | 6.8 | 7.8 | 0.8 | 1.1 | 0.01 | 0.025 | 0.5 | 0.6 | 1.2 | 1.3 |
| Loan and Advances | 61.6 | 63.5 | 36.2 | 39.4 | 4.3 | 4.2 | 0.9 | 1.1 | NA | NA | 24.6 | 27 | 11.8 | 12.8 |
| Loan Duration >3yrs (% of total loans) | 34.0 | 38.4 | 34.1 | 33.7 | 19.2 | 21.9 | 19.4 | 24.2 | NA | NA | NA | NA | NA | NA |
| Net Interest Margin | 2.4 | 2.5 | 3.4 | 3.6 | 3.3 | 3.3 | 8.3 | 7 | 1.9 | 1.6 | 6 | 5.7 | NA | NA |
| Cost of Funds (%) | 4.9 | 4.2 | 5.4 | 4.5 | 3.7 | 2.5 | 8.7 | 7.3 | 1.6 | 3.1 | NA | NA | NA | NA |
| Standard Assets (% of all assets) | 89.2 | 90.6 | 94.9 | 95.3 | 97.7 | 97.6 | 98.1 | 94.6 | NA | NA | 93.7 | 94.0 | ||
| CRAR (% of statutory requirement) | 143 | 156 | 183 | 204 | 197 | 217 | NA | NA | NA | NA | 153 | 177 | NA | NA |
Key trends:
- In FY’21, public deposits in banks increased by 12%, yoy, driven by higher household savings rate due to the lockdowns. But, bank loans grew by less than half of that at 5%, yoy.
- A positive development despite a slowdown in lending was, long term loan (>3 yrs) portfolio of banks witnessed a sharp rise. It had been shrinking consistently since 2014 which led the Government to announce DFIs to fund long term projects.
- Standard assets witnessed a recovery, however this was due to moratoriums granted on loan repayments.
Banks appear healthier with a significantly higher CRAR than statutorily required. Similar trend among major NBFCs.
TruQuest is knowledge series launched by TruBoard Partners providing succinct updates and views on:
- Liquidity outlook
- India’s macro economic view
- Trends within the infrastructure, Real Estate and Renewable Energy sectors
- Impact analysis of new regulations and policies on lending and capital flow
Author: Debopam Chaudhuri, Head of Research and Ratings
+91-9819239926, dc@truboardpartners.com
Author: Debopam Chaudhuri
Head of Research and Ratings
+91-9819239926
dc@truboardpartners.com
Disclaimer
The data and analysis covered in this report of TruQuest has been compiled by TruBoard VT Pvt Ltd and its associates (TruBoard) based upon information available to the public and sources believed to be reliable. Though utmost care has been taken to ensure its accuracy, no representation or warranty, express or implied is made that it is accurate or complete. TruBoard has reviewed the data, so far as it includes current or historical information which is believed to be reliable, although its accuracy and completeness cannot be guaranteed. Information in certain instances consists of compilations and/or estimates representing TruBoard’s opinion based on statistical procedures, as TruBoard deems appropriate. Sources of information are not always under the control of TruBoard. TruBoard accepts no liability and will not be liable for any loss of damage arising directly or indirectly (including special, incidental, consequential, punitive or exemplary) from use of this data, howsoever arising, and including any loss, damage or expense arising from, but not limited to any defect, error, imperfection, fault, mistake or inaccuracy with this document, its content.