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'Improved economic environment to boost FY21 credit growth'
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SME Times News Bureau | 27 Feb, 2021
Improved economic environment in 2HFY21 and the Centre's focus on higher
spending especially on infrastructure will give a boost to FY21 credit
growth, India Ratings and Research (Ind-Ra) said.
The agency's
February 2021 edition of its credit market tracker showed an upgrade to
its FY21 credit growth estimates to 6.9 per cent from 1.8 per cent.
Accordingly,
the agency said that amid the pandemic, the credit offtake in the
banking system has remained muted, which led to lesser issuances of
certificates of deposits (CDs).
"The CD issuances for January
2021 increased for public sector banks, whereas that for private banks
have remained muted. Concurrently, the CD yield across maturities was
confined to a narrow range, amid subdued issuances. Similarly, the
issuances of commercial paper (CP) by corporates have fallen, due to a
lesser requirement amid fewer rollovers.
"The CP yields however
have largely seen an upward revision, owing to the Reserve Bank of
India's announcement of the restoration of liquidity management
operations."
Besides, demand from fund houses for corporate bonds
and short-term funds has increased by "Rs 52 billion and Rs 10 billion,
respectively".
On the other hand, the agency said that CP
issuances by non-banking financial companies and housing finance
companies have remained encouraging, both in terms of total amount and
volumes.
"The agency believes that the normalisation of economic
activities and a conducive rate environment remain supportive for this
segment."
"On account of the excess liquidity in the system, a
similar trend has been observed in CD-overnight index swap negative
spread which is showing green shoots in the credit demand."
Furthermore,
Ind-Ra cited that net foreign portfolio investments in equity declined
in January 2021, "whereas the net investments in the debt segment was
around negative Rs 25.18 billion".
"India along with other
emerging countries such as Taiwan and South Korea saw a large sell-off
by foreign portfolio investors during the month.
"Investments by
mutual funds in non-convertible debentures have improved; on the other
hand, investments by mutual funds in CPs and CDs have declined, in banks
and corporates specifically."
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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66.20
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64.50 |
UK Pound
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87.50
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84.65 |
Euro
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78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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