Banking Current Affairs- 1 (April 1-3, 2012)

Fino to target North East

  • Financial Inclusion Network and Operations (Fino), a Mumbai-based financial inclusion facilitator, makes plans to tap the north-eastern region and help in achieving financial inclusion there.
  • Fino has tied up with four banks including State Bank of India (SBI), Axis Bank and ICICI Bank to tap this region. Fino has largest market in Andhra Pradesh, where it has presence across 620 blocks and 9,900 gram Panchayats.

SBI’s Credit Targets 19-20%

  • India’s largest lender State Bank of India (SBI) is aiming to post a credit growth of 19-20 per cent in the current financial year. The Chairman of SBI Pratip Chaudhari discloses that last year, the Credit Growth target was 18-20%, which was reduced to 16-19 per cent from an estimated projections of 19-22 per cent at the beginning of the year. Lowering of growth targets was mainly due to lack of demand from corporates owing to economic slowdown.

Indian Economy under tight liquidity situation

  • The economy of India seems to be under tight liquidity condition, as all macroeconomic indicators blinking red.
  • Currently, Inflation is not in RBI’s comfort zone and the recently presented budget has proposed a fiscal consolidation plan, with under-priced subsidies.
  • Apart from that RBI’s intervention in the foreign exchange market to support the rupee has resulted in a severe liquidity crunch, as reserve money creation has been slow. These all factors indicate that in near future RBI may not cut the policy rates.

No additional monetary stimulus- Federal Reserve

  • The United States Federal Reserve’s Open Market Committee has recently voted against further stimulus on the ground that the US economy gradually improves.
  • So far two rounds of Fiscal stimulation have been carried out and third round was eminent till January 2012.
  • However, in these months there has been a turnaround in the tone and now it has been decided not to go with bond purchases to boost growth. The recent development has hammered US stocks, bonds and gold, while boosting the dollar.

India’s Annual Credit Growth

  • The RBI has released the latest data of the Credit Growth in Indian Banking System. It says that in February and March, Banks added Rs 2.6 lakh crore, or a little more than a third of the financial year’s total of Rs 6.6 lakh crore of loans.
  • As on March 23, annual credit growth stood at 16.98 per cent, above the central bank’s revised projection of 16 per cent.
  • Its worth note that RBI has scaled down the year-end credit growth projection twice. The central bank had increased the repo rate by 175 basis points in April-October 2011 to tackle high inflation and inflationary expectations, and banks had responded by increasing lending rates. So, the demand for credit was hit during the initial part of financial year 2011-12.
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