Finally, a better map of the world in the RBI Bulletin - moving away from that degrading Mercator projection.
Toll collections are back, but EWay bills are still not close to the peak in March, yet.
Vehicles and transport don't look greawt. Petrol consumption (by volume) is up above Feb 2020, but Diesel and others are still low. Vehicle registrations still struggling.
Surprisingly, Steel consumption is down big time. Cement is okay (just 5% more than 2019).
Air passenger traffic sucks (40% of Feb 2020 domestic, 15% of international)
But cargo is back to Feb 2020 levels. Has not risen though.
The labour market (read: not you people on twitter) is struggling to reach back to the 2020 pre covid levels:
Lousy results by HDFC Bank. Ignore the 38% growth (they conveniently forgot that they merged with HDFC in July last year) - the real profit growth is just 3%. Even that is probably because of Credila (they got a pretax profit of some 7000 cr. because of it) Discl: Small pos.
Credila was sold off in 2024 March, which pretty much made their bottomline. They also had an extra floating provision of 10,900 cr. (which would have brought down the profit) and that's likely because they see more issues in retail.
Oh, no tax this quarter - they got a favourable order of 6000 cr. and wrote back provisions of 3000 cr.
These two: another 9000 cr. that works in their favour. And yet, a profit growth of just 3%. It's a little strange why 10,000+ cr. of floating provisions were taken then.
If you wonder why RBI's all antsy about growth of the credit ecosystem, it's because things are looking really hot here:
The credit/deposit ratio is at the highest it's ever been. Banks have to put about 18% of Deposits in GSecs and 4.5% in CRR.
This means of every 100 rs. Deposit they can only lend out Rs. 77.5. Banks will have their own capital - between Rs. 10 and Rs. 15 for every Rs. 100 in lending so they can lend out as much as 88 also. It appears that banks are lending as much as they can and some more.
This is a little bit of a problem because the areas you see where the C/D ratio is above SLR/CRR limits? Those periods correspond to high inflation; and it appears we are back.
I should write a more detailed piece on this, but I'll start this way: it should not surprise us that banks aren't doing that well. And given that Indian government bonds will have more demand from foreigners, expect this ratio to stay high at least this year.
Oh, and deposit growth is only around 13%, versus credit growth of 19%.
Deposit rates - for relatively shorter terms like a month or two - are better with money market/liquid funds. Corporates have slowly figured this out, at least the large ones. Individuals will.
But, to be fair, banks raise money using bonds and CDs, and thus the C/D ratio should include such liabilities separately. RBI will hopefully give us those aggregate pieces of data too.
Currently HDFC's large bond issuances - probably 2-3 lakh crore - skews it a bit.
Inflation goes up mildly to 5.55% as food inflation shows its ugly head again. Last year though, there was a dip at this time, so that's a bit of a base effect also.
As you can see, closer, here:
Everything else moderated, inflation wise. Only food went up. and that's a problem, since elections are on their way. No wonder the govt wants to cut fuel prices, to compensate.
RBI increases risk weights for banks and NBFCs. This is pretty big!
1) All consumer credit (other than housing, vehicle, gold, edu and MFI loans) see an increase in risk weight to 125% from 100%
What this means is:
In effect, if a bank has 20% CAR for personal loans (unsecured) or loan against fd/stocks, then it's lent Rs. 100 for Rs. 20 in capital. Now that Rs. 100 will be counted as Rs. 125 (125% risk weight) so the CAR falls to 16%.
Banks and NBFCs will now see much lower CARs.
2) NBFC loans will also see an increase of risk weight to 125%. This affects most consumer lending NBFCs and nearly all fintech players.
3) Credit card receivables for banks RW up to 150% (from 125%) and for the two nbfcs that can issue credit cards it's up to 125% from 100%
India's Current Account Deficit fell by half, to $9bn from $18bn in Q1 last year. More charts follow.
Net of gold, India's current account is actually positive! Gold is more a financial account item, since it's more used as a financial instrument. Think of it as reverse FPI or such. If we did that, our current account would be marginally positive:
Service exports were down , merchandise imports were up. The trade deficit expanded to about $21.4 bn for the quarter.
This is HUGE! RBI says banks and NBFCs have to release documents of properties and collateral mandatorily within 30 days!
* Have to remove encumberance within 30 days, and return docs
* Docs can be returned from any branch, not just home branch of customer
* Loan docs must mention where the borrower can get them back once he repays
* If the bank/NBFC doesn't return docs or release the encumberance charge within 30 days - they pay 5000 rs. per day of delay
* If bank/NBFC loses the docs - they will pay and assist owner in getting docs back or attested copies (but they get another 30 days i.e 60 days before the 5K per day penalty, only if they lose the docs)
* If the loan taker dies, Banks/NBFCs need to have a detailed procedure on how heirs can get original docs.
Applies for even past loans where full repayment happens after December 1, 2023.
This is awesome for homeowners who borrow, but also for collateral based lending like for cars, securities and all the other stuff. And applies to NBFCs also, so housing finance companies can't escape.
Funda is that banks and NBFCs would string homeowners for a long time saying oh we can't find the docs, or we'll give it to you after 6 months etc especially when you transfer home loans (you need to repay the last lender to transfer a loan) Made it difficult to shift.