Monday, January 21, 2013

Risk To Bank Is Unavoidable Without Change In HR Policy, I.e. Until Bad Officers Are Punished AND Good Ones Are Awarded


Mon, Jan 21, 2013 at 20:34

Banking outlook negative on higher NPAs: Moody's

Global ratings agency Moody's on Monday said it has a "negative" outlook on India's banking system due to concerns over asset quality and the high interest rates. "In India, impaired loans are yet to peak among public sector banks," Moody's said in its Asia-Pacific Banking Outlook


Global ratings agency Moody's on Monday said it has a "negative" outlook on the India's banking system due to concerns over asset quality and high interest rates. "In India, impaired loans are yet to peak among public sector banks," Moody's said in its Asia-Pacific Banking Outlook.

The agency further said though the government is "likely to remain supportive", options for the Reserve Bank of India to slash lending rates are limited due to high inflation and the "modest fiscal capacity".

RBI has not given into the growing pressures to ease its elevated interest rate, which is one of the highest in the world and the highest amongst the BRIC nations, citing the high inflation and the government's inability to reign-in the fiscal deficit at desired levels. However, the Moody's report said interest rates are likely to fall during 2013 but still they will remain higher than the rest of Asia.

Noting that 94 per cent of the banks it rates in Asia carry stable outlooks on their deposit ratings, Moody's said the negative outlook on specific banks mostly relate to India. On the compliance with the stricter Basel-III regulation, which require higher capital reserves, it said that most of the Asian banks comply with the requirements but the pressure to compete with peers from the Western countries facing delays in execution may have forced countries like India to delay implementation.

The Reserve Bank had delayed the implementation of Basel-III by three months to April 2013, from January 2013 earlier. The BSE's banking index Bankex slipped 0.21 percent to 14,520 points as against the 0.31-percent gains on the Sensex.



Mon, Jan 21, 2013 at 22:13

Indian banks may face hurdle to raise fund under Basel III

Banks from the Asia-Pacific region as a whole were better placed to meet the higher capital requirements under Basel III norms, but Indian and Chinese banks may find it difficult to raise funds to meet the new norms due to their rising bad assets, ratings agency Standard & Poor's said today.

Banks from the Asia-Pacific region as a whole were better placed to meet the higher capital requirements under Basel III norms, but Indian and Chinese banks may find it difficult to raise funds to meet the new norms due to their rising bad assets, ratings agency Standard & Poor's said today.
"We expect banks in high-growth systems such as India and China to face challenges in maintaining or raising capital ratios to keep pace with growth in risk assets," S&P said in report. It estimated that capital shortfall of major Indian and Chinese banks could reach about USD 100 billion by 2019 though, as a whole, it said that Asia Pacific banks were better placed than their peers elsewhere.
     
"Asia-Pacific banks are poised to take the global lead in implementing Basel III in 2013. Most countries in the region have published their final set of Basel III capital reform regulations effective from January 2013 and these banks will adopt the new capital regulations ahead of their global peers," Standard & Poor's credit analyst Naoko Nemoto said.
     
However, the Reserve Bank of India had last month rescheduled the starting date for implementation of the Basel III norms to April 2013. As per the agency, while the US has delayed the implementation and timetable of the Basel-III capital reforms, a final draft is under discussion in the European Union. 

Defaults will continue to haunt govt-run banks: Moody's
In its Asia-Pacific Banking Outlook 2013, it said impaired loans were yet to peak among PSBs in India
BS Reporter / Mumbai Jan 22, 2013, 00:41 IST


Rating agency Moody’s has singled India from its otherwise positive outlook for the banking sector in the Asia-Pacific.

 The rest of the region could get a respite from defaulting loans on the back of economic recovery but Indian public sector banks (PSBs) will continue to be hit by bad loans, it has said.

 In its Asia-Pacific Banking Outlook 2013, it said impaired loans were yet to peak among PSBs in India.
While the government (India) was likely to remain supportive, relatively high inflation and modest fiscal capacity meant policy options were constrained when compared to China.

 The modest cyclical rises in non-performing loans (NPLs) in many countries in the region will persist in the first half of the year, says Moody’s. This will be seen especially in trade-focused economies, most affected by the global economic slowing.

 Rising asset quality pressures have been barely detectable in most countries in the region and NPLs are expected to peak in most banking systems by mid-year as economic recovery takes root. Any additional credit costs can, in the vast majority of cases, be easily absorbed by earnings. The two main possible exceptions are Vietnam and India, whose banking sectors get negative outlooks. Moody’s says the Vietnamese banking system is in much worse shape than India’s.

 On interest rates in the Asia-Pacific, Moody’s said India and Vietnam were both exceptions to its general observation that interest rates in Asia were very low.

 Both countries, when compared with the rest of the region, were seeing higher inflation and weaker exchange rates.

 While interest rates are likely to fall in India and Vietnam in 2013, they will also remain higher than in the rest of Asia. A higher interest rate regime meant weaker resilience for their banking systems in a global economic slowdown after a relatively rapid credit growth, it added.
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