Correct. Its actually good news, banks will have more liquidity available for growth.
The provisioning was sharply lower than what was proposed in the draft norms, which proposed that banks set aside a provision of 5 percent of the loan amount when the project is in the construction phase, reduced to 2.5 percent once it becomes operational and then down to 1 percent after the project starts generating cash sufficient to cover lenders’ repayment.
In banking, trust is extremely important. Without trust there would be no deposits.
Next requirement is professional competency. Without the competency to lend correctly and manage loan recovery, the bank would not make profits.
I think the bank is doing pretty good in both the fields.
Some Retail Shareholders are feeling impatient and frustrated, however the institutions seem to be getting more and more invested.
I agree, I think the bank is doing ok as a business. I think it would be a bit harsh to say Mr Vaidyanathan has not performed. They have cleaned their books of legacy infrastructure loans, grown deposits really well in an environment where raising deposits hasn’t been easy for a lot of banks, and have trended generally upwards in terms of revenue and operating profits. They have had a rough few quarters , and I absolutely agree that a lot of work remains to be done, especially with regards to cost-to-income and hence the return metrics, but I do believe the direction is right.
Disclosure: Invested, bought more in the recent correction.
