Do it yourself

The RBI in its latest  Financial Stability Report , has cautioned about the emerging risks in the markets. In particular, the RBI highlights three risks to be watched carefully by the investors – (i) financial sector asset quality, especially for the private banks and small banks; (ii) valuation risk in the equities; and (iii) financial risks emanating from stablecoins and private credit. Credit Quality is good, but needs to be watched One of the clearest messages from the RBI’s latest Financial Stability Report is this: India’s banking system is in good shape, but some areas of concerns have emerged. Banks today are better capitalized, more profitable and far cleaner than they were a decade ago. Capital adequacy ratios are well above regulatory requirements; liquidity buffers are comfortable and gross NPAs continue to trend down. Even under RBI’s worst-case stress scenarios, banks remain resilient. For investors, this is a big positive. Strong banks mean smoother credit flow, bett...

Micro, small and medium size enterprises (MSME) have been widely recognized as the core of India’s development plan. MSME are not only critical from their economic importance, but are also drivers of social development. MSMEs generate large employment; help in managing regional imbalances; help in bridging income and wealth inequalities; and most importantly, enable the large enterprises to attain competitive scale and efficiency. MSMEs contribute 30.1% to India’s Gross Value Added and 45.79% to exports ( ₹ 12.39 lakh crore in 2024-25). Unfortunately, in the past 10 years, especially in the wake of demonetization, GST implementation and Covid-19 pandemic, India’s MSME sector has faced serious challenges to growth. The NITI Aayog in a recent report, “Enhancing Competitiveness of MSMEs in India, ” prepared in collaboration with the Institute for Competitiveness, has provided a strategic roadmap to strengthen India’s MSME sector. The report identifies key challenges and proposes r...

  The recent household finance data published by the Reserve Bank of India has made it to media headlines. Reportedly, the net financial savings of Indian households have crashed to a nearly five-decade low of 5.1% of GDP; while the financial liabilities of households shot up by 5.8% of GDP in 2022-23. Obviously, it is a worrisome trend from many aspects. Traditionally, household savings have been a stable and cost-effective source of funding for both - the government and corporate. High domestic savings provided a critical cushion to the Indian fiscal position from external shocks during the Asian currency crisis, the dotcom bubble, and the subprime crisis. Of course, the weakening of this cushion should be a cause of worry. However, there is nothing surprising in this data. Household savings have been consistently declining for the past many years. I have highlighted this trend on several occasions. For example, check Household savings – 1 , Household savings - 2 , Household sa...