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Indian Bank and Finance industry rising to the occasion

August 16, 2023

Indian Bank and Finance industry rising to the occasion
The recent merger of HDFC mortgage lender with HDFC Bank has created a behemoth capable of challenging the largest American and Chinese lenders. The merged entity, HDFC Bank, is now the fourth largest bank globally in terms of market capitalisation, just behind JP Morgan Chase & Co, Industrial and Commercial Bank of China, and Bank of America. 

Even at this scale and size, HDFC Bank aspires to double its size over a period of next four years. The bank’s aspirations are reflective of the depths of buoyant Indian economy that is tipped to be the fastest growing one for the next three years.
 
This is a very significant development on its own, indicating the rising strength of the Indian financial system on the world economic map. Domestically, the rise of such a mammoth entity will create more competition among the top public and private sector banks.
 
Besides, Indian banks, in general, are having a good run. The industry has largely remained insulated from a global crisis in the industry with their heavy reliance on the local markets. The bad-loan ratio at Indian banks is at a decade low of 3.9 per cent, at the end of March 2023, as per the Reserve Bank of India’s Financial Stability Report. The central bank expects the ratio to fall further to 3.6 per cent by March 2024.
 
In contrast to the global financial system, “the financial sector in India has been stable and resilient, as reflected in sustained growth in bank credit, low levels of non-performing assets and adequate capital and liquidity buffers,” RBI Governor Shaktikanta Das wrote in the report.
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