Banking Daily News: 21th July 2023

Indian Banking Sector's Non-Performing Loans (NPLs) Forecast: 3-3.5% by 2025

S&P Global Ratings forecasts a decline in India's banking sector's weak loans to 3-3.5% of gross advances by March 2025, attributing it to structural improvements and positive economic prospects. The report anticipates India's GDP growth to range from 6% to 7.1% annually during fiscal years 2024-2026, making it the fastest-growing economy in the Asia-Pacific and globally. Strengthened balance sheets and increased demand are expected to drive bank loan growth, although deposit growth might lag.

Key Facts:

• S&P predicts India's banking sector's weak loans to drop to 3-3.5% of gross advances by March 2025.
• Factors: Structural improvements and positive economic prospects.
• India's GDP growth estimated at 6-7.1% annually in fiscal years 2024-2026.
• Stronger balance sheets to boost bank loan growth.
• Deposit growth may lag behind amid favorable economic conditions.

Centre Relaxes Regional Rural Bank Merger Rules

The Centre has granted regional rural banks (RRBs) a five-year exemption from the merger control regulations imposed by the Competition Commission of India (CCI). This move aims to streamline the consolidation process of RRBs, allowing them to merge without the need for prior CCI approval. Additionally, the Finance Minister will conduct a review of RRBs' operations and technological advancements nationwide.

Key Points:

• Centre exempts regional rural banks (RRBs) from CCI merger control for five years.
• Facilitates consolidation without prior CCI approval.
• Finance Minister to review RRBs' functioning and technology upgradation nationwide.

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