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Business EYE February 26, 2021 | The Indian Eye 36

government now lifts embargo

on business to private banks

India Ratings and Research (Ind-Ra) has revised its outlook on the overall banking

sector to stable for FY22 from negative

Our Bureau Ra, large private banks will ben-

New Delhi efit from credit migration due to
their superior product and ser-
he Central government vice proposition.
on Wednesday has lift- Ind-Ra estimated that about
Ted the embargo placed 1.24 per cent of the total bank
granting businesses to private book is under incremental pro-
banks, which is expected to en- forma NPA and about 1.75 per
hance customer convenience, cent of the total book can be re-
spur competition and higher ef- structured by end-FY21.
ficiency in standards of custom- But everything is not going
er services. well for the banks, especially the
stocks. This week, bears were

in a statement, the de- on rampage at the bourses with
frontline benchmark indices
partment of financial collapsing on Monday as traders

services (dfs) said: “the resorted to heavy selling in auto,
IT and public sector bank stocks.
government has lifted the Except for Nifty metal, which

embargo on private banks bargo, there is no bar on the graded its FY21 credit growth moved up by 1.6 per cent, all oth-
estimates to 6.9 per cent from er sectoral indices at the National
Reserve Bank of India (RBI)
(only a few were permitted for authorisation of private sec- 1.8 per cent and 8.9 per cent in Stock Exchange were in the red

earlier) for the conduct of tor banks (in addition to public FY22 with improvement in eco- with Nifty IT and realty down by
sector banks) for government nomic environment in 2H FY21 2.8 per cent each, PSU bank by
government-related bank- business, including government and the government’s focus on 2.6 per cent, pharma by 2.5 per
ing transactions such as agency business. higher spending, especially on cent and auto by 2.2 per cent.
infrastructure.
Meanwhile, taking to Twit-
Among stocks, Eicher Mo-
taxes and other revenue ter, Finance Minister Nirmala Ind-Ra said the regulatory tors crashed by 5 per cent to Rs
payment facilities, pen- Sitharaman said: “Embargo changes led to an improvement 2,453 per share while Mahindra
lifted on grant of Govt business in public sector banks’ (PSBs’) & Mahindra sank by 4.7 per
sion payments, small sav- to private banks. All banks can ability to raise AT I capital, a cent to Rs 837.90. Maruti Su-
ings schemes, etc.” now participate. Private banks high provision cover on legacy zuki skidded by 3.3 per cent to
NPAs, overall systemic support close at Rs 7,087.15 per share.
can now be equal partners in de-
velopment of the Indian econ- resulting in lower-than-expect- Tech Mahindra lost by 4.6
“This step is expected to omy, furthering Govt’s social ed Covid-19 stress, and minimal per cent, Dr Reddy’s by 4.4 per
further enhance customer con- sector initiatives, and enhancing surprises arising out of amalga- cent, Axis Bank by 4 per cent,
venience, spur competition and customer convenience.” mation of PSBs. IndusInd Bank by 3.9 per cent
higher efficiency in the stan- Meanwhile, India Ratings Also, the fact that the govern- and SBI Life by 3.8 per cent.
dards of customer services. Pri- and Research (Ind-Ra) has re- ment has earmarked Rs 34,500 Index heavyweight Reliance In-
vate sector banks, which are at vised its outlook on the over- crore for infusion in PSBs in 4Q dustries dipped by 3.8 per cent
the forefront of imbibing and all banking sector to stable for FY21-FY22 should suffice for and wound up the day at Rs
implementing latest technology FY22 from negative. This is their near-term growth needs. 2,000.10 per share. However,
and innovation in banking, will because substantial system- Private banks continue to metal stocks gained substan-
now be equal partners in devel- ic measures have reduced the gain market share both in assets tially with JSW Steel up by 2.3
opment of the Indian economy system-wide Covid-19 linked and liabilities while competing per cent, Hindalco by 2 per cent
and in furthering the social sec- stress below the expected levels, intensely with PSBs. Most have and Tata Steel by 1.4 per cent.
tor initiatives of the Govern- it said adding banks have also strengthened their capital buf- Besides, Adani Ports, ONGC,
ment,” it added. strengthened their financials fers and proactively managed HDFC Bank, Britannia, Hero
The DFS further informed by raising capital and building their portfolio. MotoCorp and Asian Paints
that with the lifting of the em- provision buffers. Ind-Ra up- As growth revives, said Ind- traded higher.

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