Bank Crisis Explain: There has been devastation in the banking sector of America and Europe. Big banks like Silicon Valley and Credit Suisse have collapsed. However, much effect of this crisis is not being seen on Indian banks. Let us know the reason behind this.
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Bank Crisis News: America and Europe, the world’s two biggest economic superpowers, are currently facing a huge crisis. Many banks have suffered a tremendous setback due to the earthquake in the banking sector. Silicon Valley Bank of America (SVB) and Europe’s Credit Suisse are the latest examples of this. The condition of both these banks has deteriorated. now based in switzerland UBS has Credit Suisse Have decided to buy. The way the banking sector of America and Europe has shaken badly, the same effect has not been seen in India.
Compared to America and Europe, Indian banks are in a very strong position. This comes at a time when the global banking industry has been completely shaken after at least four banks collapsed or were in need of bailout. At the same time, Switzerland’s UBS has taken over Credit Suisse in a historic deal of $ 2 billion (about Rs 16,500 crore). Next we will see how Indian banks managed to save themselves even in such bad times.
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performance of indian banks
- In the last few years, Indian banks have also faced problems like bad loans and limited capital. However, now there has been improvement in this matter and at present these banks are in a better position.
- Compared to US banks, Indian banks are doing better with current capital levels, good asset quality and strong supervision by RBI.
- According to State Bank of India’s ‘Ecowrap’ report, Indian banks in India are a symbol of resilience amid global claims.
- According to this report, foreign claims on India are less as compared to countries like UK and US. Due to this, the upheaval of global banking has not directly affected Indian banks.
- According to the World Bank, foreign claims are defined as the total of cross-border claims in all currencies and public claims of foreign offices.
- America has the highest foreign claim with $ 4,345 billion. At the same time, the ratio of foreign and domestic claims in India is also very less as compared to these countries.
- Capital to Risk Weighted Assets Ratio (CRAR) should be at least 9% as per RBI norms. According to the RBI report released in December last year, the ratio of CRAR and Common Equity Tier 1 (CET1) at the end of September is 16% and 13% respectively.
- Gross non-performing assets to total advances ratio has also come down for Indian banks. In September 2022, it reduced to 5%. Apart from this, there has also been a good performance in liquidity.
Depositors’ insurance increased
The insurance cover of depositors ie depositors depositing money in Indian banks has been increased. Earlier it was Rs 1 lakh per account, which has been increased to Rs 5 lakh per account. This has increased the trust of depositors in banks.
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