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Indian Banking Industry Review – Feb 2010

We are seeing lots of news about the Indian banking industry in the domestic as well as in overseas markets. The Indian Budget 2010-11 has mentioned new banking licenses, which means we will see new players and hence more competition, and better savings and lending rates, which is better for the consumers and borrowers.

  • On the domestic front, regulatory action in terms of increasing the CRR ratio and migration to base rate from the current PLR system were on the negative side while marginally better than expected third quarter results were a positive.
  • The change in the CRR rate has already resulted in a sudden spike in the yields especially in the short end of the yield curve.
  • The hardening of bond yields will have negative impact on Q4FY10 results of banks especially PSU banks.
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