Indian banks pass stress test
Mumbai, Source: Business Standard
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MTM risks to the Indian banking sector are limited and manageable.
The Indian banking system is resilient to the shocks that may arise due to higher non-performing assets (NPAs) and the global economic crisis, the Reserve Bank of India’s (RBI’s) stress test has shown.
RBI’s Annual Report-2008-09 said the test was done to assess the capital adequacy of the banks to sustain losses from deteriorating asset quality, primarily due to falling external demand in the wake of the global recession a subsequent slowing of domestic private demand.
A similar test was done to assess the risks associated with the mark-to-market (MTM) losses on the banks’ overseas exposure. MTM means stating losses based on the current market value of the currency. The assessment, done in 2008, suggested that the MTM risks to the Indian banking sector appeared limited and manageable.
The exercise tested the banks’ exposure to seven sectors whose prospects have dampened due to the slowdown in external demand.
The sectors were chemicals/dyes/paints, leather and leather products, gems and jewellery, construction , automobiles, iron and steel, and textiles. These account for 15.4 per cent of total advances and 12.2 per cent of gross NPAs of Indian banks. The test assumed 300 per cent and 400 per cent simultaneous rise in NPAs in these sectors and adjusted the additional provisioning requirements from existing capital and risk-weighted assets. Barring two banks, which accounted for 3 per cent of the total assets of the banking system, others were found to have the strength to withstand such a risk.
In September 2007, following the financial crisis in the US, RBI started a monthly reporting system to capture the banks’ overseas exposure to off-balance sheet items (primarily credit derivatives and investments such as asset-backed commercial papers and mortgage-backed securities). An analysis of such information so far has revealed that the banks’ exposure to such instruments has gradually come down from June 2008. The MTM losses, however, gradually increased up to March 2009, reflecting the impact of the sustained fall in value of the assets. |
India's Foreign Trade Data: July 2009
New Delhi
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India’s exports during July, 2009 were valued at US $ 13623 million (Rs 66041 crore) which was 28.4 per cent lower in dollar terms (minus 19.0 per cent in Rupee terms) than the level of US$ 19036 million (Rs. 81548 crore) during July, 2008. Cumulative value of exports for the period April- July, 2009 was US $ 49651 million (Rs. 241735 crore) as against US $ 75289 million (Rs. 315978 crore) registering a negative growth of 34.1 per cent in Dollar terms and 23.5 per cent in Rupee terms over the same period last year.
India’s imports during July, 2009 were valued at US $ 19621 million (Rs. 95118crore) representing a decrease of 37.1 per cent in dollar terms (minus 28.8 per cent in Rupee terms) over the level of imports valued at US $ 31189 million ( Rs. 133609 crore) in July,2008. Cumulative value of imports for the period April- July 2009 was US$ 78564 million (Rs. 382422 crore) as against US$ 116382 million (Rs. 488668 crore) registering a negative growth of 32.5 per cent in Dollar terms and 21.7 per cent in Rupee terms over the same period last year.
Oil imports during July, 2009 were valued at US $ 5638 million which was 55.5 per cent lower than oil imports valued at US $ 12675 million in the corresponding period last year. Oil imports during April- July, 2009 were valued at US$ 21964 million which was 48.0 per cent lower than the oil imports of US $ 42217 million in the corresponding period of last year.
Non-oil imports during July, 2009 were estimated at US $ 13983 million which was 24.5 per cent lower than non-oil imports of US $ 18514 million in July, 2008. Non-oil imports during April- July, 2009 were valued at US$ 56600 million which was 23.7 per cent lower than the level of such imports valued at US$ 74165 million in April- July, 2008. The trade deficit for April-July, 2009 was estimated at US $ 28913 million which was lower than the deficit of US $ 41093 million during April-July, 2008.
| (PROVISIONAL) |
JULY |
APRIL-JULY |
| EXPORTS(including re-exports) |
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| 2008-2009 |
19036 |
75289 |
| 2009-2010 |
13623 |
49651 |
| Growth 2009-2010/ 2008-2009 ( Per cent) |
-28.4 |
-34.1 |
| IMPORTS |
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| 2008-2009 |
31189 |
116382 |
| 2009-2010 |
19621 |
78564 |
| Growth 2009-2010/ 2008-2009 (Per Cent) |
-37.1 |
-32.5 |
| TRADE BALANCE |
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| 2008-2009 |
-12153 |
-41093 |
| 2009-2010 |
-5998 |
-28913 |
| Figures for 2008-09 are the latest revised whereas figures for 2009-10 are provisional |
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Forex up $4.4 bn, 10-yr paper touches 10.5%
New Delhi
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The country’s foreign exchange reserves for the week ended 28 August rose massively by $4.4 billion to $276.4 billion. According to weekly statistical statement released by RBI While foreign currency assets dropped by $415 million to $260.5 billion, gold reserves were held at $9.67 billion. Special drawing rights with the IMF increased by $4.8billion to $4.82 billion and reserves with the IMF fell by $1 million to $1.35 billion. Foreign exchange reserves slid $18.9 billion in the past year, the RBI said. Meanwhile the yields in the bond market saw a major firming on Friday. However it , came off the 10-month high of 7.50% after the better than expected auction results led to value buying by market participants towards the close.
The benchmark 10-year benchmark paper, 6.90% bond maturing 2019 closed at 7.47%, after touching an intra-day high of 7.50%, as against the close of 7.40% on Thursday. The auction worth Rs 12,000 crore saw devolvement in two of the three securities offered. The cut-off was set at 7.45% for the auction of 6.49% bond maturing 2015, with a devolvement of Rs 348 crore. “We had expected the 10-year at a cut-off of 7.50%. We have seen the bond market firm up in the last 3-4 months as a result of accelerated bond issuances programme.” said jay Marwah, executive director of fixed income at NFIS. |
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India, China growth driving global economic revival
Global investment firm, Moody’s, says that driven by renewed growth in India and China, the world economy is beginning to recover from the one of the worst economic downturns in decades. “The world economy is starting to recover thanks to renewed growth in China and India,” according to a report by Moody's Economy.com, an arm of Moody's. India and China, which are two of the world’s fastest growing economies despite the global slowdown, have led the growth. The Chinese GDP has risen by 7.9 per cent while that of India has grown by 6.1 per cent in the April-June 2009-10 period. Moody’s has now revised India’s growth forecast to 6.4 per cent for the current fiscal on September 3, 2009. Economies in the European, North American and Latin American regions too are beginning to bottom out. |
UP SEZs clock exports worth Rs 16,814 crore
All the functional special economic zones (SEZs) in Uttar Pradesh, including private and government-promoted ones, clocked exports worth Rs 16,814 crore in 2008-09.
The two government SEZs, at Moradabad and Noida, employ over 30,000 people directly. The private SEZs include Moser Baer India Ltd (non-conventional energy), Wipro Technologies Ltd (IT/ITeS) at Greater Noida, besides HCL Technologies Ltd (IT/ITeS) and Seaview Developers Ltd (IT/ITeS) at Noida.
While Moradabad SEZ recorded an increase of around 27.5 per cent in exports in FY’09, Noida SEZ saw a slight dip of 3 per cent to Rs 16,308 crore.
Product-specific Moradabad SEZ, which was set up to promote handicrafts, comprising world famous art-metal and brassware, registered exports worth Rs 14.33 crore in 2008-09.
Meanwhile, total exports by private SEZs registered a growth of 300 per cent in 2008-09 at Rs 506 crore with a total investment of Rs 1,806 crore, providing direct employment to over 5,000 people.
Excluding Moser Baer SEZ, the other three SEZs became operational in the later part of financial year 2007-08 or in first quarter of FY’09.
To further propel SEZ productivity and give thrust to industrial sector, exports and employment generation, a high-level meeting of UP Infrastructure & Industrial Development department was held.
It deliberated upon measures to facilitate hassle-free industrial activity, trade and transactions to maintain competitive edge of SEZs in attracting long-term investment.
Now, SEZ units have also been exempted from entry tax with effect from June 30, 2009 like 100 per cent export-oriented units, which had been exempt from entry tax since July 1, 2008.
At present, there are 16 SEZs in Uttar Pradesh, which had been notified and ready to be operational soon. Besides, 19 SEZs had been formally approved by the Board of Approvals of the central government, including six more government SEZs. |
India speeds past China in auto exports
China may be the world's shop floor, but India is rolling it out faster when it comes to automobile exports. India exported a total of 2.30 lakh cars, vans, SUVs and trucks between January and July 2009, a growth of 18% even as China’s exports tumbled 60% in the same period to 1.65 lakh units. The Indian domestic market may be just 19% of China’s — which has overtaken the US to become the world’s largest — but the ‘Made In India’ tag, especially on small cars, has clearly acquired a global cachet, helping auto exports grow even as other countries suffered a slump. Industry experts pointed out that India scores due to its liberal investment policies and high quality manufacturing which stems from its growing prowess in research and development.
Source: The Times of India |
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