Implications For Indian Banks, Life Insurers Amid Global Rate Shifts: DRChoksey's Thematic View

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Deven Choksey Research Report.The Indian banking sector is currently feeling the effects of the recent interest rate cut by the US Federal Reserve. While the substantial reduction in US rates may create pressure for the RBI to adjust its rates, we anticipate that the RBI will maintain a neutral stance in its upcoming October 2024 meeting, bolstered by the ongoing resilience of the Indian economy. However, given the prevailing macroeconomic uncertainties, the RBI may need to reassess its position in the longer term to ensure economic stability..Repo-linked loans are directly influenced by changes in the Reserve Bank of India's repo rate, and this linkage can lead to margin compression for banks when the repo rate is reduced. Large private sector banks, such as HDFC Bank and Axis Bank, which have around ~55% of their loan portfolios tied to the repo rate or external benchmarks, are more vulnerable to margin pressure in the short term if the RBI cuts rates..On the other hand, smaller private banks like IndusInd Bank and Bandhan Bank, which have a higher proportion of fixed-rate loans, will be less affected by changes in the repo rate. IndusInd Bank has ~50.0% of its loans, respectively, in fixed-rate categories, further reducing its exposure to repo rate volatility. SBI has ~36.0% of its loan portfolio linked to the Marginal Cost of Funds-based Lending Rate, which adjusts more gradually compared to repo-linked loans. This higher share of MCLR-linked loans reduces SBI's sensitivity to short-term rate cuts, providing a buffer against immediate margin contraction..Click on the attachment to read the full report:.NBFC Q2 Results Preview - Trends Point At Seasonally Weaker H1: Motilal Oswal.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Implications For Indian Banks, Life Insurers Amid Global Rate Shifts: DRChoksey's Thematic View

The brokerages believes life insurance companies are one-of-a-kind bets on structural growth with minimal balance-sheet risk.

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Implications For Indian Banks, Life Insurers Amid Global Rate Shifts: DRChoksey's Thematic View

The brokerages believes life insurance companies are one-of-a-kind bets on structural growth with minimal balance-sheet risk.

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