Ever for the reason that disaster at US-based Silicon Valley Financial institution (SVB) got here out within the public final week and plenty of Indian start-ups additionally acquired affected, questions have been raised on whether or not there may very well be any influence on Indian banks as properly.

Based on an evaluation by world monetary main Jefferies, Indian banks are properly positioned when it comes to high quality of deposits and in addition the doable influence of mark-to-market losses on held-to-maturity e-book.

“Within the backdrop of SVB, we check Indian banks on (1) high quality of deposits & (2) influence of MTM loss on HTM e-book. On funding, >60% of deposits are households’, financial savings dep. (deposits) are sticker (length 3-5yrs), folks do not transfer to G-Secs rapidly,” said the report by Jefferies.

“On belongings, loans are 65% of belongings & investments 25%. HTM is allowed on GSecs & kinds 80% of that & 15% of belongings. On 4-5yr length, influence might be simply 6% of capital for Pvt. BKs (personal banks) & 15% for PSUs,” it added whereas highlighting that “Indian banks are properly positioned”.

When it comes to deposits, the evaluation additional confirmed that whereas 63 per cent comes from households which can be usually “stickier”, solely 22 per cent comes from corporates whereas authorities and NRIs accounted for 9 per cent and 6 per cent, respectively.

Additional, Indian banks have a a lot larger dependence on time period and financial savings deposits whilst retail deposits fashioned 55-60 per cent of complete deposits for personal banks whereas the share was pegged at 67 per cent for government-owned banks.

Curiously, the Jefferies has a purchase score on most Indian banks together with ICICI Financial institution, Axis Financial institution, Kotak Mahindra Financial institution, IndusInd Financial institution, Bandhan Financial institution and State Financial institution of India.

It additionally has a purchase score on many non-banking monetary corporations (NBFCs) like Bajaj Finance, LIC Housing Finance, Piramal Enterprises, Cholamandalam Funding & Finance Firm, Aptus Worth Housing Finance India and Can Fin Properties amongst others.

By the way, the evaluation by Jefferies comes on the again of many consultants warning that extra banks within the US may face a disaster like SVB.

“Extra banks will possible fail regardless of the intervention, however we now have a transparent roadmap for a way the federal government will handle them. Financial institution boards and managements have obtained an enormous wake-up name. Being a director or CEO of a financial institution that fails is not any enjoyable: years of litigation, regulatory investigations, private legal responsibility, potential civil and legal expenses, and large reputational harm,” tweeted Invoice Ackman, American billionaire investor and CEO of hedge fund administration firm Pershing Sq. Capital Administration.

The US regulators closed Signature Financial institution on Sunday, two days after the authorities shut down Silicon Valley Financial institution. Earlier than being closed, SVB was the sixteenth largest lender and a serious financier of expertise start-ups. It had $209 billion in complete belongings and almost $175.4 billion in complete deposits as of December 2022.

Additionally learn: ‘Extra banks to possible fail regardless of the intervention’: Invoice Ackman on Silicon Valley Financial institution disaster

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