Satyamurti Venkataraman’s Post

#MCOpinion | The RBI's ban on four NBFCs for usurious loan pricing raises concerns over excessive interest rates and potential bubbles in unsecured lending sectors. 💰📈 Know more on this👇 https://lnkd.in/dyRAsvvB #RBI #Ban #NBFC #LoanPricing #InterestRates 

Just a few days ago, the Reserve Bank of India (RBI) issued cease-and-desist orders to four NBFCs and lenders, freezing their loan sanctions and disbursals mainly due to one damning reason — excessive interest rates. In an age where risk-based pricing has become the norm, and high rates for riskier borrowers are justified by economic concepts such as adverse selection, it begs the question: How much is too much? In this edition of The Big Picture, our CEO Rajat Deshpande takes a closer look at a question that cuts to the heart of ethical lending: What truly constitutes a fair interest rate? When does justifiable pricing tip into exploitation? Read the full article to explore where fair risk-based pricing ends and predatory lending begins. https://lnkd.in/gugV2nVM

NBFC borrowing from banks rises despite higher risk weights: RBI NBFC borrowings from banks stood at 21.7% as on March 2023, data from the Reserve Bank of India (RBI)’s Financial Stability Report showed on Thursday. Read more 👉https://lnkd.in/gcY4FUBC #nbfc #banks #rbi #finventoeconomics #financialstability

SBI hikes FD rates by up to 75 basis points Banks raised Rs 32,860 crore in April compared to Rs 1.27 trillion in March through CDs, according to Prime Database. #finventoeconomics #finvento #economics #startupfunding

Federal Bank MD Shyam Srinivasan described the Reserve Bank of India’s LCR guidelines as an effort to balance assets and liabilities, though he noted it is still a draft and awaits the final order from the central bank. In an exclusive chat with #Informist, Srinivasan highlighted that corporate lending in India is gaining momentum as capital expenditure across sectors improves. With a Net NPA of 0.6%—which he says is the healthiest among peers—the bank expects 10-12% growth in corporate lending for FY25. He is confident of achieving 20% year-on-year growth in both advances and deposits for the current fiscal. Find more in this #Informist Exclusive: #CorporateLending #BankingSector #RBI #FederalBank #EconomicGrowth https://lnkd.in/gtrtzAeM

Are Banks looking forward to RBI MPC reducing interest rates soon? If you are Home loan or Auto Loan customer, you must be eagerly waiting for RBI to reduce the Repo rates so that your EMI will come down instantly. If you are an active Stock Market investor, you will want a repeat of September 19 Market reaction (when Federal Reserve reduced the rates in US and Dow Jones and S&P 500 increased by 1.6% on the same day, delighted with reduction in rates. Sensex/Nifty also surged by 1.5% on 20th due to the same reason). But as a Banker, are you likely to be as excited as the two communities mentioned above? Banks like low repo rates as it helps them lower the cost of funds and simultaneously it also boosts demand for loans. But in the current situation, are Banks likely to be as excited about the same? Today a Bank is not chasing loans as demand for credit is very high, but chasing FDs as accretion (funding for loans) lagging significantly behind the demand for credit even while they are offering rates anywhere between 7% to 9% for Fixed Deposits with even large Banks like IDFC First, Bandhan, IndusInd offering 7.75 to 8% and most small finance Banks offering 8.5% to 9% (Indicative and for different tenures) In the latest post of the Chai and Charts Chronicles, we discuss a point of view on what could a rate cut mean for a Bank especially in the near term and hence what they might be hoping in private. In case you have received the post in your email, we do hope that you will read it, if not done so already. In case you are not receiving in your mailbox for whatever reasons, you can read the same here. https://lnkd.in/dKJAZGmK Since many of you are part of BFSI in more ways than one, I will be happy to know your perspective on the same, more so if it is contrarian to what we think.

RBI, FM should go deeper in to the cause, No surplus with mass , all either borrowed or lost in stock market dream / MF . Structural change in the country's model & corporate borrowing rates to be checked . spread is too wide 11%-17% , 6 % shortfall this will be having its crippling effect over time and will become like US Pension issue. banks may not be able to pay back the depositors in time .

Is a moneylender just a moneylender? Or is one person's credit provider another person's usurer? The RBI certainly seems to think that there's a difference. Amid charges of usurious interest rates, high processing fees and frivolous penalties, the central bank has barred 4 NBFCs from sanctioning new loan disbursements. Which would be acceptable if the charge was specific, measurable and equitable. Ganga Narayan Rath and I have penned an article for The Ken today explaining why this may not really be the case. Is this really good for financial inclusion? Read more via the link below: #rbi #usury #nbfc #mfi #banking #prioritysectorlending #financialinclusion #india #apr #interestrates #accesstocredit #microfinance #smallticketloans #lending #dmifinance #navifinserv #dlai #face #mfin #sadhan

how you can believe such news? when you reach any financial institutions, no banks give you proper information about cgtmse also don't provide correct information, even if the consumer is ready to provide twice the value of security against demand, Reserve Bank of India (RBI) #msmedevelopment #entrepreneurshipdevelopment https://lnkd.in/dEVdhUxs

Sources are reporting that the FDIC said 63 banks are on the brink of failure. I don't believe the FDIC said anything remotely close to 63 banks being on the brink of failure. The FDIC did report that the number of troubled banks increased from 52 to 63, around 1.4% of banking system. This is a troubling increase but not all troubled banks are on the brink. Separately, they also reported a large increase in unrealized securities losses. I suspected the "on the brink" comment was exaggerated and indeed you see most of that type of language from the crypto-sphere. The reality is that due to unrecognized interest rate and credit risk (eg CECL required loss reserves are very understated I believe), the number of troubled banks is likely much higher than 63. But no, I don't believe the 63 are on the brink of failure. There is trouble brewing in the banking system, but it's important to get the risk and story straight. There were only 5 bank failures in 2023 (vs 52 troubled banks). Below is directly from the FDIC quarterly bank report: "The number of banks on the Problem Bank List, those with a CAMELS composite rating of “4” or “5,” increased from 52 in fourth quarter 2023 to 63 in first quarter 2024. The number of problem banks represented 1.4 percent of total banks, which was within the normal range for non-crisis periods of one to two percent of all banks. Total assets held by problem banks increased $15.8 billion to $82.1 billion during the quarter. " Federal Deposit Insurance Corporation (FDIC) #banking #bankfailures