Putting changes in perspective

NPS Contribution Grows 30%
Covid-related relaxations gave a boost to NPS. Contribution under NPS grew over 30% with assets under management at Rs 4.94 lakh crore as on September 30, 2020, as compared to Rs 3.71 lakh crore a year ago.

Repo Transmission Improved
The weighted average lending rate on fresh rupee loans declined by 94 bps between March and November 2020 in response to reduction of 115 bps in the policy repo rate and comfortable liquidity conditions. The weighted average lending rate on rupee loans fell 67 bps.


Forbearance Gives a False Sense of security
Prolonged forbearance has the effect of overstating the actual capital and creating a false sense of security. With forbearance, a bank can rejig troubled loans and still report capital adequacy ratio at 12%. But without forbearance, the bank would make provisions.

Public Issues Used Aptly
Resource mobilisation through public issues between April-December period was higher at Rs 31,087 crore as against Rs 10,950 crore in the year-ago period. A number of firms raising money was less at 33.

FPI Inflows Jump 5.4%
Net investments by FPIs was Rs 2.1 lakh crore during Apr-Dec 2020 as compared to net inflows of Rs 0.81 lakh crore during the same period in 2019-20. Total cumulative investment by FPIs rose by 5.4% to $273.6 billion as on Dec 31, 2020 from $259.5 billion the year before.

Lending to Zombies Increased Manifold
Regulatory forbearance led to higher lending to low-solvency and low-liquidity firms as witnessed in higher lending to unproductive firms, known as “zombies”. Such firms have high interest coverage ratio. Share of new loans rose from 5% in FY08 to 27% in FY15.

Defaulters Among Restructured Cos Rise 51%
The proportion of restructured firms that became defaulters grew by 51% in the forbearance period, while the pre-period increase was marginal (by 6%). In terms of amount under default, the figure more than doubled (an increase of 114%) in the post-forbearance period.