India will be pragmatic over shadow banking crisis

2018 ◽  
Keyword(s):  
Financial Services ◽  
Private Equity ◽  
Banking Sector ◽  
Prime Minister ◽  
Shadow Banking ◽  
Short Term ◽  
Content Type ◽  
Public Sector Banks ◽  
The Government ◽  
Bad Debt

Significance It last month allowed banks to lend more to NBFCs that do not finance infrastructure, with the raised limit effective to year-end. This came after the government took control of the Infrastructure Leasing & Financial Services (IL&FS) firm, which in August began to default on its short-term debt, raising concerns about liquidity in India’s shadow banking sector. Impacts Delhi is likely to merge more public sector banks, aiming to reduce their bad debt. Some domestic and foreign private equity firms could seek to purchase assets from Indian NBFCs. A recession would hinder the prospects of Prime Minister Narendra Modi winning a second term in the 2019 general election.

Fast growth may avert foreign banks' exit from Hungary

2015 ◽  
Keyword(s):  
Financial Institutions ◽  
Banking Sector ◽  
Prime Minister ◽  
Foreign Banks ◽  
Content Type ◽  
Balance Sheets ◽  
Government Relations ◽  
Local Currency ◽  
Wait And See ◽  
The Government

Subject Prospects for the banking sector. Significance The government is buying a 30% stake in the Austrian lender Erste Bank under a memorandum of understanding (MoU) with the European Bank for Reconstruction and Development (EBRD). The MoU signifies a volte-face by Prime Minister Viktor Orban, whose relationship with foreign-owned banks has been fraught with difficulties since the imposition of a levy on financial institutions in 2010 that drove down earnings and achieved notoriety as one of the highest taxes of its kind in Europe. The government has pledged to reduce the bank tax during 2016-19. Impacts The MoU may not redefine government relations with foreign banks, but could mean more activity on the market by institutional investors. Banks will clean up balance sheets, adopting a 'wait and see' strategy until FX debt relief peters out and the bank tax starts to fall. A return to profitability is unlikely before 2016; much depends on an uptake in corporate and household loans denominated in local currency.

Politics set to slow Pakistan's divestment drive

2016 ◽  
Keyword(s):  
Public Sector ◽  
Economic Reform ◽  
Prime Minister ◽  
Structural Reforms ◽  
Short Term ◽  
Content Type ◽  
Reform Agenda ◽  
Political Patronage ◽  
The Government ◽  
Core Condition

Subject Pakistan's divestment drive. Significance Prime Minister Nawaz Sharif's government describes divestment of public sector enterprises (PSEs), involving 69 firms, as an essential part of its 2013-18 economic reform agenda. Progress thus far is limited, but the government faces rising pressure from the IMF, which made divestment a core condition of its 6.6-billion-dollar, three-year loan in September 2013. Impacts Another government led by Sharif would continue gradual divestments after 2018. Since PSEs are an important vector for distributing political patronage, structural reforms will face stiff resistance. Divestment of profitable PSEs defeats the purpose of the exercise, but the government will use them for a short-term cash boost.

Prospects for India in 2018

2017 ◽  
Keyword(s):  
Public Sector ◽  
Prime Minister ◽  
Content Type ◽  
Public Sector Banks ◽  
Bharatiya Janata Party ◽  
Economic Slowdown ◽  
The Government

Subject Prospects for India in 2018. Significance India’s ruling Bharatiya Janata Party (BJP) has responded to the recent economic slowdown by drawing up plans to recapitalise public sector banks (PSBs) and invest in infrastructure. Prime Minister Narendra Modi is also under pressure to create jobs. The government will be expected to deliver on its promises with elections due in around 18 months’ time.

India’s remedy for bad debt may not bring relief

2017 ◽  
Keyword(s):  
Prime Minister ◽  
Banking System ◽  
Job Creation ◽  
Bank Credit ◽  
Content Type ◽  
Reserve Bank ◽  
Bankruptcy Code ◽  
The Government ◽  
Bad Debt ◽  
Reserve Bank Of India

Subject Implementation of India's new Insolvency and Bankruptcy Code. Significance Shrinking bank credit is hindering India’s ability to finance spending. The Reserve Bank of India (RBI) is relying on the recently instituted Insolvency and Bankruptcy Code (IBC) as the principal instrument to address the problem of stressed assets in the banking system. Impacts The government may accelerate plans to merge stronger and weaker PSBs. Indian corporates may increase their issue of bonds denominated in domestic currency. Prime Minister Narendra Modi will emphasise job creation rather than investment until the next election.

India elevates energy ambitions as 2019 polls near

2016 ◽  
Keyword(s):  
Public Sector ◽  
Prime Minister ◽  
Oil Price ◽  
Content Type ◽  
Public Sector Banks ◽  
General Elections ◽  
Gas Consumption ◽  
The Government

Subject Energy outlook. Significance As Prime Minister Narendra Modi's administration approaches the 2019 general elections, its key election promises are receiving increased scrutiny. On energy, the scale of ambition has increased, with targets stretching beyond 2019. The government hopes to leverage early successes to seek a second term in office to implement its agenda. Impacts Subsidies will rise when the oil price rises, although leakages will be lower. In the post-Paris summit era, the window available to India to utilise coal for growth has narrowed to 2020. The recent rise in gas consumption will continue as long as LNG prices are low and domestic coal targets are unmet. The insolvency of distribution utilities will impede their ability to fulfil their renewable purchase obligations. The problem also affects public sector banks, which hold a large proportion of the utilities' debt.

Post-virus downturn could hurt Hungary’s government

2020 ◽  
Keyword(s):  
Soft Power ◽  
Prime Minister ◽  
Medium Term ◽  
Short Term ◽  
Content Type ◽  
People's Party ◽  
European People’S Party ◽  
The Government ◽  
Stimulus Package

Significance The pandemic has strengthened Prime Minister Viktor Orban’s position in the short term. However, the government has done little on the economic front; a conservative stimulus package raises doubts that a lasting downturn can be averted and is driving medium-term risks to ruling Fidesz’s position. Impacts Tensions within the European People’s Party over Fidesz will deepen, but probably not lead to the party’s exclusion. China’s soft power will be boosted as its role in combating the virus is contrasted with Western indecisiveness. Large multinational manufacturing and services firms could penetrate the economy further but may not be able to drive a quick rebound.

COVID-19 may give Lebanon’s premier a short-term boost

2020 ◽  
Keyword(s):  
Economic Crisis ◽  
Prime Minister ◽  
Poverty Line ◽  
Economic Effects ◽  
Short Term ◽  
Content Type ◽  
Security Services ◽  
Breathing Space ◽  
The Government

Significance This came shortly after Prime Minister Hassan Diab addressed the nation, promising a 1.2-trillion-Lebanese pound (400-million-dollar) stimulus plan -- although it was unclear how this would be funded. The pandemic has in some ways provided a breathing space for Diab’s controversial, two-month-old cabinet, which was already facing a dire debt-driven economic crisis and popular unrest. It has focused national attention and allowed the government to demonstrate competence in its response -- managing the return of many Lebanese expatriates and since March 21 implementing a lockdown that has kept case numbers relatively low. Impacts The Lebanese pound is set to devalue further. With no realistic rescue plan for businesses, the economic effects of the lockdown could push many more people below the poverty line. The security services’ covert campaign against protests leaders could lead to more disorganised protests when the country reopens. Hezbollah could further disengage from its military role in Syria, focusing on protecting its community and domestic position.

The underbanked phenomena

2019 ◽  
Vol 11 (3) ◽  
pp. 385-404 ◽  
Author(s):  
Xiaoyan Xu
Keyword(s):  
Financial Services ◽  
Shadow Banking ◽  
Short Term ◽  
Policy Makers ◽  
Content Type ◽  
Financial Decisions ◽  
The Great Recession ◽  
Banking Regulations ◽  
Alternative Financial Services ◽  
Banking Institutions

Purpose The purpose of this paper is to study the “underbanked” – those who already possess bank accounts but are patrons of alternative financial services (AFS) providers at the same time. Design/methodology/approach Linking the FDIC unbanked/underbanked surveys of nationally represented households with FDIC bank information and local MSA demographics, demographic and economic profiles of the underbanked households are examined, together with the determinants of their choice of nonbank financial services. Findings The author finds that bank fees are associated with the likelihood for households to obtain AFS, especially nonbank credit. Households’ attitudes and experience with banks are important in the choice of getting AFS. Furthermore, most underbanked households used AFS temporarily, partly reflecting rather informed and calculated financial decisions. Research limitations/implications The results from this paper provide implications for different types of AFS users. For example, the use of transactional AFS responds to the availability of online or mobile banking; meanwhile, it is also sensitive to branch closure. Users of nonbank credits are likely to be price savvy, and these products serve as valuable alternatives for short-term financing, especially during unfavorable economic situation. Social implications Better understanding of the underbanked could help banks tailor to existing clients’ needs, for instance, providing innovative short-term credit products for those with little or impaired credit history. The study also helps policy makers re-evaluate banking regulations since the Great Recession. As regulations squeezed bank profits in certain areas and forced banks to consolidate, come alongside higher bank fees, potential branch closure and loss of service, which ultimately forced banked individuals to the less regulated alternative providers. Originality/value The analysis utilizes a comprehensive set of variables, from household social-economic characteristics to local banking industry characteristics, together with households’ subjective opinions of their banking institutions. The focus on the underbanked brings attention to this underserved population and discusses areas where banks can improve. The study contributes to the understanding of AFS users, draws implications for regulation toward banking and shadow banking.

Rising bad debt risks insolvency at Indian banks

2016 ◽  
Keyword(s):  
Public Sector ◽  
Fiscal Deficit ◽  
Content Type ◽  
Public Sector Banks ◽  
The World ◽  
Growing Economy ◽  
The Government ◽  
Indian Banks ◽  
Bank Bailouts ◽  
Bad Debt

Subject India's public sector banks and bad debt. Significance While India is being lauded for being the fastest-growing economy in the world, the government is grappling with a growing bad debt problem that threatens the solvency of at least some of its public sector banks. Impacts If the government prioritises its fiscal deficit targets, financing bank bailouts would be difficult. Meanwhile, banks will cut lending, thereby choking growth. Absent a clear policy, the banking strain could intensify, leading to the actual failure of some banks.

Bangladesh risks growth by not confronting bad debt

2019 ◽  
Keyword(s):  
Central Bank ◽  
Banking Sector ◽  
Banking System ◽  
Fiscal Year ◽  
Gdp Growth ◽  
Potential Growth ◽  
Content Type ◽  
High Court ◽  
The Government ◽  
Bad Debt

Subject Bad debt in Bangladesh's banking sector. Significance The High Court last month stayed until June 23 a circular issued by the Bangladesh Bank, the central bank, that appeared to benefit borrowers who had defaulted on loans from the country's banking system. Meanwhile, Bangladesh registered 7.9% GDP growth in the fiscal year ending June 2018. Impacts The government will dismiss worries about a potential growth slowdown, pointing to forecast GDP growth of 8.1% in 2018/19. The Bangladesh Bank's circular would hurt banks already burdened with losses because of provisioning against bad debt. Banks may try to reduce their exposure to single borrowers.

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