A total of 29 banks and financial institutions participated in the Survey including 11 Public Sector Banks, 05 Private Sector Banks, 04 Foreign Banks, and 02 Cooperative Banks. Representing other financial institutions, 07 leading NBFCs participated in the Survey with a combined Total Assets of over 58 Lakh Crores.
Releasing the Index for the second quarter of 2017-18, Mr Chandrajit Banerjee, Director General, CII said "GST is one of India's most significant and ambitious reforms ever attempted and it is believed that the positive impact of GST on Indian Economy is going to be significant. Apart from the GST, implementation of various reform measures by the government including promulgation of amendment to the Banking Regulation Act giving special powers to RBI to tackle bad loans has raised the expectations of substantial improvement in the financial conditions".
On the performance of the Index, Mr Rajeev Rishi, Chairman, IBA and Chairman & Managing Director, Central Bank of India said "Over all optimism on the impact of several reforms initiated by the Government, be It the special ordinance for the resolution of NPAs or GST augur well for the economy which is reflected in the Index position at 71.4. Even better reading of sub-indices of cost of funds and funding liquidity reinforces the fact that the credit is available at a much lower cost than before".
Performance of CII - IBA Financial Conditions Index for
Q2 FY 2017-18 vs Q1 FY 2017-18
CII - IBA Financial Conditions Index Sub-indices Q2Q1
DifferenceCost of Funds Index 77.6 40.3 37.3Funding Liquidity Index 72.0 72.2 -0.2External Financial Linkages Index 68.1 59.3 8.8Economic Activity Index 68.1 55.6 12.5Financial Conditions Index 71.4 56.9 14.5
Among the sub-indices, the cost of funds index contributed the highest value of 77.6, across all four sub-indices. Most of the respondents were optimistic on the improvement in both the short term as well as the long-term interest rate indicators. The funding liquidity index made the second largest contribution to overall financial condition index. The strong performance of the funding liquidity index was supported mainly by the expectation of increase in the issuance of corporate bond & mobilization from equity market while most respondents do not expect any major changes in the liquidity condition in the markets.
The External Financial Linkages Index has registered a value of 68.1 for Q2 FY 2017-18. While the performance of the External Financial Linkages Index is more or less at par with the other sub-indices, there has been a significant increase in the index value when compared to the previous quarter. The value is registered at 68.1 which is much higher than 50, signifying a strong expectation of improvement in financial conditions through external channels during Q2 FY 2017-18.
Also Read
The Economic Activity Index stands at 68.1 in Q2 FY 2017-18 reflecting the positive outlook of Indian economy. The Indian economy is expected to see gradual improvement in growth numbers primarily driven by consumption. A near normal rainfall (monsoon) supported by rural wage growth leading to increased consumption, pay hikes for state government employees, lower lending rates and an expectation of a stable global economy may lend the necessary support to GDP.
The overall CII - IBA Financial Conditions Index stands at 71.4 in Q2 FY 2017-18. The CII - IBA Financial Conditions Index was launched in April 2015 to (i) Serve as a key indicator in assessing the short term financial conditions in the Indian economy, (ii) Provide effective monitoring of current financial conditions for facilitating regulatory and policy decisions, (iii) Provide early signals on turning points in financial conditions, and (iv) Help tracking credit flow conditions for industry & service sectors from various channels.
Powered by Capital Market - Live News
Disclaimer: No Business Standard Journalist was involved in creation of this content