After more than a decade of being opened up, the insurance industry and its stakeholders have come a long way

Insurance industry: Hits and misses

Business Standard

I = Challenges for 2014-15# Deceleration in economic growth impacting expansion of banking sector. # Maintaining asset quality in the face of growing NPAs and restructuring of advances.# Augmenting capital and maintaining prudential capital.# Preserving and augment profitability in a stressed environment. # Implementing Financial Inclusion & Direct Benefit Transfer. # Increased competition from both within the banking sector with various banks becoming aggressive # Adopting and adapting to technological changes/ innovation to meet regulatory norms and tap alternative channels. # Improving quality of human resources for working efficiently under of latest technological developmentsII - Reforms on the way/ in the offing # Stringent norms pertaining to bad loans and restructured assets and their resolution.# Consolidation and mergers and entry of new players.    O  Continuous bank licensing    O Converting some urban coop banks into commercial banks    O -Separate licenses for niche areas

Indian Banking Challenges, Reforms & Expected Outcomes

The Reserve Bank of India (RBI) will announce its first bi-monthly monetary policy onApril 1. Depending on the three possible outcomes, here is how the short-term (certificate of deposits, or CDs, etc) and long-term (10-year benchmark government bond or 8.83 per cent 2023 bond) rates.

The three sides of repo rate on April 1

While keeping interest rates unchanged in its first bi-monthly policy review, the Reserve Bank of India highlighted the risk on inflation. Following are the rationale for Tuesday's decision and the way forward:

Policy rationale

In the past two decades, RBI has allowed formation of 12 new banks in the private sector. Here is a brief comparison of the guidelines issued in 1993, 2001 and 2013:

How rules became stricter

Reserve Bank of India will begin using consumer prices (retail inflation), instead of wholesale prices, for computing Real Effective Exchange Rate (REER) to depict country's relative competitiveness against trading partners

New Barometer for Rupee competitiveness

While not dropping the guard against inflation, RBI Governor Raghuram Rajan also prepared ground to support investment when growth picks up. The ball is in now in the government's court to address supply side issues with strong policy action and returning to the path of fiscal consolidation

Over to New Delhi

The Reserve Bank of India (RBI) not only granted two in-principle banking licences out of a list of 25 applicants in April, a process undertaken after more than a decade, but also opened a window of opportunity for banking aspirants. Apart from offering licences on tap, the regulator will also offer differentiated licence for niche activities. As a result, payment banks, local area banks in the country will come into existence with universal banks that are present now.

A primer on classification of banks in India

Investments by foreign institutional investors (FIIs) picked up significantly in this calendar year due to optimism ahead of the elections. FIIs were net buyers in debt in the first six months of the current year, with purchases of ~62,792 crore. They were net sellers of ~9,270 crore in the corresponding period of the previous year. In 2013, FIIs were net sellers of ~31,342 crore in June despite being net buyers in the previous months. This was because in June 2013, there were concerns of the US tapering its bond buying programme. In 2014, FIIs turned net sellers only in April as they were not permitted to invest in short-term securities like treasury bills (T-bills). However, in May, FII inflows in debt were the highest this year due to the euphoria of a new government taking over. FII flows continued in June, too, though the quantum had slightly reduced

FIIs investment in debt for first half of calendar year

While the Union Budget has proposed several measures for revival of the financial services industry, there has been a mix of good and bad news for the industry in the Finance Bill. A look at the finer points in Bill

Finance Bill: Mixed tidings

On August 28 last year, the rupee hit its historic low of 68.85 a dollar, amid uncertainties over the US Federal Reserve's tapering of its monthly bond-purchase programme. The rupee's woes were compounded by widening of fiscal and current account deficits - both were at record highs. On September 4, at a time when the rupee was the worst performer among Asian currencies, Raghuram Rajan took charge as RBI's governor. A slew of measures that he announced for attracting inflows helped improve sentiment. With these steps, the rupee's fortunes also turned. Business Standard looks at the situation a year ago and compares it with now.

Rupee crisis: A year on

The insurance sector is on the brink of a major technology-driven change, according to a research report on insurance and technology by the Morgan Stanley and Boston Consulting Group (BCG). The report says technology-driven change creates exciting opportunities for insurers keen to embrace it, but poses significant risks for laggards. The research report, 'Insurance and Technology: Evolution and Revolution in a Digital World', estimates technology could reduce the combined ratio as much as 21 per cent. Compared to a baseline insurer with a combined ratio of 99 per cent, the combined ratio of a digitally born insurer will be 78-82 per cent, it says.

Insurance sector: On brink of tech-related change

RBI Governor Raghuram Rajan has held the policy rate for the fourth consecutive time, as inflation has stayed above the central bank's tolerance level, though its downward trajectory has provided the banking regulator some comfort. While Rajan refrained from indicating when rate cuts could be expected, he said moves in this regard would depend on data. Here are the current numbers that underpinned the policy decision:

Keeping his cards close to his chest

RBI and govt have started discussion on how to take forward the recommendations of the Urjit Patel committee, set up to review the monetary policy framework

Monetary policy framework: India vs US

On July 15 last year, the Reserve Bank of India announced liquidity-tightening measures to check currency volatility, after the rupee started falling rapidly against the dollar. In July, it had breached the 60-a-$ mark, the first time. The currency had fallen 10% since April 2013. This prompted RBI to make liquidity dearer by increasing the marginal standing facility rate by 200 bps to 10.25% and capping banks' borrowings via the liquidity adjustment facility at 1% of their net demand and time liabilities. This was the first of several measures the Centre and RBI announced in the subsequent weeks to tackle the crisis. Since the rupee hit its nadir on August 28, 2013, (68.85 against the $), becoming the worst performing Asian currency, its fortunes have changed after RBI Governor Raghuram Rajan announced steps to attract inflows on his first day in office (September 4). A  look at how changing macroeconomic fundamentals helped the rupee gain strength

A year after currency crisis

The Reserve Bank of India (RBI) on Thursday released draft guidelines for licencing of payment banks and small banks. A brief comparison of guidelines for licensing of payments banks, small banks and universal banks:

Decoding the guidelines

Raghuram Rajan's policy stance was interpreted as a 'tad hawkish' as compared to the previous policy, as the RBI governor refrained from indicating when the rate cut cycle will commence. Also, he was firm in his resolve to tame the rise in prices.

Putting the lid on rate cut hopes

Following the government's announcement, the Reserve Bank of India has offered banks incentives for extending loans to the infrastructure sector

Is infra sector starved of Funds?

Fifteen years since its inception, private and public sector players have taken efforts to promote growth and improve penetration

15 years of insurance industry after privatisation: The tech edge

After cutting the key policy rate by 25 bps on January 15, the Reserve Bank of India (RBI) on Tuesday decided to keep the interest rate unchanged, as no new data has come since the last rate action.The central bank said future policy action would depend on sustaining the disinflation process and the upcoming Union Budget - to be presented on February 27 - which will show the government's resolve for adhering to fiscal discipline.

More rate cuts? Budget may provide the answer

Reserve Bank of India Governor Raghuram Rajan kept the policy rate unchanged for the fifth time in a row, but with a clear hint to cut rates early next year, inflation trend and fiscal health willing.  Here are the factors that form the basis for future policy action

Warming up for action

Finance News: Latest investing news and finance headlines straight from Business Standard.

Page 1133 - Finance News