It is gives me a Great pleaSure to be here davos for the operationing of the world eConomic forum. While The Winter Outside is Cold, The WARMTH of Coming Together of EMINENT Le ADERS and Experts from DIVERSE FIELDS MORE THAN Compensates for it. The Meetings Assume GreaterRelevance When Fundamental Changes are TAKING Place in A Global Scale that WOULD POTENTIALLY ShaPE OUR Common Destiny. ) for giving me this oppointunity to speak at this event.
2. Up Better than ExpedECTD. The Odds of a Soft Landing Have Increased and this has enthused the Financial Markets. Financial conditionshave easy, and markets have scaled new highs, raising concesss that they might be running ahead of themslves. At this critical juncture, Certain Hard Facts HAV E to be kept in mind, namely, global geowth is slowing down; Geopolitical situes to be fragileWith new flash points and fear of support chain disruptions; Geo-Economic Fragmentation Remains Unabated GLOBAL Trade; and The Dauting Climate Lated Challenges are holding their group.Indore Stock
3. Given this global setting, i propose to speak on the brad theme of india’s journey from crasis to confidence. In Maintaining Macroeconomic and Financial Stability, Which are the prime residThe Talk About the Emerging Fintech Space and Payments Ecosystem that has been because the Hallmark of India’s Success in Financial Innovation and Inclusion. Finally , I propose to end with some concluding remarks.
Macroeconomic Stability
4. Amidst An University and Challenging Global Macroeconomic Environment, The Indian Economy Presents A Piction of Confidence, Positivity and OPTIMISM. Recent GROW TH OUTTURNS HAVE SURPRISED MOST FORECASTS on the UPSide. After CLOCKING Real GROSS DOMESTIC PRODUCT (GDP) Growth of 7.2 Per Center in2022-23, Real GDP IS Expected to Grow by 7.3 Per Center During During During During During During During During During to the Latest Release by the Native Statistics (NSO). D CONDITIONS, India Remains The FastStst Growing Major Economy and is Now the FifthLarget Economy in the World. In Fact, in Purchasing Power Parity (PPP) Terms, India is Alream the Third Larget Economy. ECTED That India’s Contribution to World Growth Will Rise from the Current 16 Per Center to18 per center by 2028. Strong domestic demand remains the main driver of grewth, although there is a significant increase in indian eConomy’s global increy OUGH Trade and Financial Channels. Higher Reliance on DOSAND CUSHIONED India From Multiple External Headwinds.
5. We have emerged from the data of shocks with stronger functionals & ndash; inflation is eleing; Bank and Corporate STRONETS are stronger than before ;Forex reserves. The decisive and timely monetary Policy Actions of the Reserve Bank of India Through Policy Rate and liquidity means a’s question and Sustaind Recovery. Added to this, The Structural Reforms Undertaken by the Gover Nate Few Years in the Field ofTAXATION, BANKING, Ease of Doing Business, ManuoFacturing, Inflation Management, DIGITALISATION COTH A CLEAR Focus on PHYSITAL Infrals Ve Boosted The Medium and Long-Term Growth Potential of the Economy. These Reforms are constinuously Helping the Indian Businesses to Improve PRODUCTITITYand Adopt Technology Driven Changes Across the Spectrum. Ives (PLIS) SCHEME. Services Security, Which Contributes The Largras Share to Total Value AdDition in the Economy, is Fast AdOpting New TechnologiesTo Improve Delivery, Reach, and Competitiveness. The External Demand for India’s Services is Surging and Diversify. Ed Services to Other Professional Services Like Business Development, Research and Development, Professional Management, Accountance and Legal Services on the. back of rising competitivityThen, then
6. Headline Inflation has substantially eased from its highly elevated level of the summer of 2022. This disinFile is underPinned by Statement In CPI Core (EX. Cluding Food and Fuel Group) INFLATIONWould Show That Our Monetary Policy Action of Increasing The Repo Rate by 250 Basis Points Between May 2022 and February 2023, together with rebalancing of liquidity , is Working. Even as the Cost-Push Pressures Induced by High Commodity Prices and Supply-Side Shocks HavesEased, Adverse Transition Food Price Shocks with Their Incision Incision and Innsity, are imparting consciousRATILITY to Headline Inflate. Pro-Acti. VE Supply Side Interventions by the Government Have Played A SIGNIFICANT ROLE to MITIGATE The IMPACT of Food Price Shocks. Going FORATIONOUTLOOK WOULD BeE CONSIDERABLY Influenced By Food Prices, Which Remain UNCERTAIN. Recurring Food SHOCKS COULD Lead to De-Achoring Expectat Ions and generalization of price pres thought. Monetary Policy, Amidst the UNCERTAINTIES, Needs to be alert and Reminflate to Steer InflationTOWARDS The TARGET RATE of 4 Per Center on a Duraw Basis. Needless to add that a stable inflation will provide the lick to india & rsquo;
7. Turning to the Outlook On Inflation and Growth for the Next Financial Year (2024-25), Our Research Teams Are in the Process of Making a Comprehesive Asset F Our Forthcoming February 2024 Monetary Policy. At this Stage, Our Expectation is that theCPI Inflation Will Averse Art 4.5 Per Center in FY 2024-25. As Regards Growth, my sense that the GDP Growth in India Will Touch 7 Per Center 2024-25. this on the basis of Strong Momentum of EconomicActivity Seen in India. Consequently, Growth Would Be 7 Per Center for Four Consecutive year Starting FROM FY 2021-22.
Financial Stability
8. Let Me Now Turn to Financial Stability. A Stable and Efficient Financial System is Pivotal in Safeguarding Monetary Stability; Meeting The Financing Needs of Th TH eConomy; Protecting depositors and Investors Interests; and Achieving Sustainable Economic Growth.Robust Earnings, Strong Buffers, Rene covering Focus on Governance and Streangthening of Balance Sheets. This has been posted to the embips of the banks under the OV. ERARCHING, Prudent and Proactive Financial Sector Policies Adopted by the Reserve Bank of India. Overall, The Indian BankingSector has seen a remarkable turnaround in the recent period. INE Streangthening of the InternaL Defences of the Banking System Which Has Stood us in Good Stead as can be seenFrom the Latest Performance Indicators.2
9. The Non-Banking Financial Companies (NBFC) sector is also reflecting sounding public parameters.3 ImproVED BALARANCE Sheets of Financial Institutes Are Good Support to Dual and Broad-Based Credit Growth. Moreover, Macro Stress Tests Undertaken to Assess The ResilleBanks Under Adverse Stress SCENARIOS Show That Their Capital Ratios Will Remain Sufficiently ABove the Regulatory Minimum.4 Rapid Growth in Retail Ially Unsecured Credit, and Growing Interconnectness Between Banks and NBFCS, However, Necessity The Reserve to take Pre-EMPTIVE POLICY ACTIONSTo Prevent Potential Build-Up of Risks and SAFEGUARD Financial Stability.5
10. The Recent Developments in the Banking System of Some Advanced Countries Drive Home The Importance of Ensurynt Asset Liability Management; Robust Risk M Anagement; Sustainable Growth in Liabilities and Assets; UNDERTAKING PERIODIC Stress Tests; And Building Up Capital Buffers for Any Unanticipated TressThe reserve bank has appliced a judicious mix of micro and macroprudential measures to streadthen Financial Stability and Support Growth in the Real. 7
11. The Reserve Bank has overhauled the regulatory Architecture of Banks, NBFCS, Urban Cooperates and Other Segments of the Financial Ecosystem. So Been Taken for Mitigating Cyber Security Risks and Enhancing Operational Resiliation of the Regulated Entities Our APPROACH HAS Been to EnsureThat innovation is assimally;
12. In Parallel, We have promi, a paradigm shift in the reserve bank & rsquo; s Supervision of the Financial sector. And Remediation of Risk Factors by Identifying Root Cautors of Vulnerabilities and TriggerIn Timely InternationalDistress. The Systems have ben reciBrald to be more projective and forward-longing and to smart a distress early.
13Nagpur Stock. A Key Component of Financial Stability is to have a Currency that is stable and appreciates or depreciates in the orderly manner. ncluding business, Investors and, Above All, The People Stand to Benefit from a Stable Currency. Excessivevolatility has to be checked through the intervention by the Central Bank, more so in an emerging market economy (emer). ND its Exchange Rate is Market Determine. Its Relative Stability in the Recent Period is an outcomeOf the Stringth of the Indian Economy, its macroeconomic functionals and improvements in india & rsquo; S EXTERNAL POSITION, particularly the significant Mo DRATION in the Current Account deficit (CAD) and Revival of Capital Flows on the Back of Comfortable Foreign Exchange Reserves. Labelling The Indian RupeeIn Any Other Manner by Cherry-Picking Time Periods for Analysis is not appropriate and grossy inconsistent with reality.
14. During the Recent Period of Heightend UNCERTAINTY, The Emerging Market Economies (Emes) WERE at the Receiving ENCESS VOLALITY in US DOLLAR and BOND IELDS. In view of the systemic impoxic impoxic imprtortance of the us economy in the Global Financial System, SpillOvers fromThese Fluctions Are Not UNEXPECTED, ESPECIALLY in the Context of Shift Expectations About the Monetary Trajectory in The US and Its Own ENTALS. In Such A Situation, The Emes, Which Have their own dynamics and challenges, cannot afford to be held bystage byInternetal Finanance Cycles. Emes have to atto Safeguard their own. We agree that should be flexibility in exchange rates, but it should not be a d ESTABILISING Influence on the domestic economy of emes.More nuanced and balanced view of the policy perspectives of the emes.
15. OverALL, DOMESTI MACROECONOMIC and Systemic Risks in India Have DCLINED and the Improving Balance Sheets of Financial Institute, Together with PRUDENT LICIES of the Regulators, have StreangThened the Resiliation of the Financial System.
Fintech and Payments ecosystem
16. There are severts aspects of the Indian economy white are reflecting a lot of promise. I have chosen One Area Which Merits Greater attention, the FinTech and thes. Payments ecosystem.
17. The FinTech Esystem in India Has Tredyndously Improved the Delivery of Financial Services by Making them Faster, Cheaper, Efficient and More Accessible. a is Currently the World & RSQUO; S Third Larget Fintech Ecosystem in Terms of the Number of Fintech Entities Operating in India.The Adoption Rate of FinTech in India is 87 Per Center, which is well Above the Global Average of 67 Per Center. India & rsquo; SD 150 Billion by 2025, A SIGNIFICANT Leap from USD 50 Billion in 2021.8 The JamTrinity & NDASH; A Combination of Bank Accounts (Jan Dhan); Aadhaar (India & RSquo; Sbiometric Identity System that Providentity AND PORTABLE PROOF OF IDENTI Ty); And Mobile Phone Numbers & NDASH; Has Revolutionized India & RSquo; S Fintech Ecosystem in Terms of Financial Inclusion, Digitision of FINACIAL Services, and Overall Services Delivery.
18. The Indigenously DEVELOPED Unified Payments interface (upi) has ben the game Changer. Its success story has, in faction, become an interniational model. Nteroperability of UPI Across Banks Has Created A Unified Payment Ecosystem. Its User-Friendly Interface and QRCode-based Payents have made it very popular. It has facilitated digital payments for Small Business and STREET VENDORS. The Success is Visible With more than 12 Billion TransactionS Carried Out Through Upi in December 2023.Upi like & lsquo; Conversational payments & rsquo; back by an artificial intends. To Upi Would Further Enhance ITS Versosition. ENTS ThroughThe upi. The linKage Between india & rsquo; s upi and singapore & rsquo; Spaynow Bears Testimony to the Resillence as a Potential Global Fast T System. The Journey Continues as we have signed up mous with a feet Other countries to tap the benefits offered byUpi.
19. With 24X7 Operationalization of Retail As Well As Large Value Payment System Operating by the Reserve Bank, India Is PART of a Club OF Selectries PriveRies Round the CLOCK FACILITIES with Real Time Groupment (RTGS). With such availability, more than485 Million Digital Payments Happen Every Day. This phenomenenal group of digital payments is reflected in the reserve bank & rsquo; INDEX Which Has Increased Almost Four-Fold in The Last 5 Years.9
? Esting of Financial Products or Services within A Controlled Environment. One of its notable Successs is upi123pay, which enables officeUpi Payments. The Regulatory Sandbox Framework has Made Interoperation in 2023 Across Multiple Regulators. The reserve bank and the innovation hub set up by the reserve bank amplify our color,Pursuit of innovation.
21. AS A STEP Towards Greater DigitalISATION, The Pilot for Our Central Banking Digital Currency (CBDC), E-Rupee, WAS LAUNCHED in Both WHOLESALE and RETail in November-December, 2022. SINCE REN, 4 Million Customers Have Been onboarded.The CBDC will entertains, ESPECIALLY in areas with Limited Internet Connectivity. We Expert Our CBDC (E-Rupee) ETTER and facilities seamless cross-border payments.
22. Our Approach to FinTech Ecosystem is Customer-Centric, with Focus on Ensuring Effective Oversight, Ethical Conduct, Risk Management, and Encouration Self -Regulation by the Fintechs themslves by Establish A Self-regulatory Organisation (SRO).
Conclusion
23. The Global Eyeomy is Confronted with Multiple Challenges. There is a Dire Need for Collective and Coordined ALL Stakeholders and Global Agencies. M SURE The DISCSSIONS in Davos Will Energise The Spirit of Coopration and Guide us to a Better Future.
24. As far as the indian economy is concept, it is now point for a long haul of higher geowth. There are challenges, but they have to be dead with efficiency. a confluence of factors in its favour, the confidence on india & rsquo;s Prospects is at an all-time high. We have to make this happy in reality. THIS JOURNEY.
That. Namaskar
1 BASED on First Advance Estimates (FAE) for 2023-24 Released by NSO, ManuoFacturing Sector Has a Share of 17.7 Per Center in GDP, While Services SECTOR HAS SHARE of 63.3 Per. Center in GDP.
2 The Capital to Risk Weighted Assets Ratio (Crar) of the Banking System at 16.8 Per Center Remairntly Above the Regulatory Minimum, While Profitability H As Grown to MultideCadal Highs. The Return on Assets and Return on Equity of the Banking System Are AT 1.3 PerCenter and 13.7 Per Center, Respectively. Asset Quality has further Improved with gross non-performing assets (GNPA) Ratio and Network Assets (NNPA) Ratio Falling To Multiyear Lows of 3.3 Per Center and 0.8 Per Center, Respectively.
3 The Crar of NBFCS at 27.6 Per Center in September 2023 Remains Well Above the Regulatory Minimum of 15 Per Center; The GNPA Ratio Has DeCline 7.2 Per Center Mber 2021 to 4.3 per center in september 2023; And nim and RoaStood at 5.1 Per Center and 2.8 Per Center, Respectively, in September 2023.
4 for instance, if A 250 Basis Points (The Cumulative Rate Hike Between May 2022-February 2023) Parallel Upward Shift in the YIELD CURVE IS Applied, The Mark-TO-MAR Ket Impact on the Held to Maturity (HTM) Portfolio of Banks WouldReduce the System Level Capital to Risk Weighted Assets Ratio (Crar) Per Center 13.1 Per Center 2023. ULD Reduce the Crar to 15.6 Per Center. Under Both Instances, However, The Crar WillRemain Above the Regulatory Minimum.
5 Considering The Persistent Credit Growth in Certain Segments of Retail Credit, Pre-EMPTIVE Measures Weered November 16, 2023 To Sober Down Undue CE Which Was Clearly Visible. Risk Weights on Certain Segments of Credit WERE EERED BY 25 PERCENTAGE POINTS.Issue of interconnectedness through banking to nbfcs have ben addressed through higher risk weights.
6 in India, Risk MANAGEMENT MeASURES Are in Place Which Alow Banks to PROVIDE for Interest Rate Risk with The UPTURN of the Interest Rate Cycle. Investment Flutuation Reserves (IFR) & NDASH; Where Banks Transfer Net Profit on Sale of Investment Unil ITReaches at Least 2 Per Center of the Held-FOR-TRADING (hft) and available for sale (AFS) Portfolios & NDASH; Create Next Banks in India, Irrespective of Size, are subject to liquidity courage Ratio(LCR) Guidelines Which Have Stringent Requirements for Unsecured WHOLESALE Funding. The value guidelines on available for sale (AFS) Category is Strin. Gent and Follow a Conservative Approach.
7 we have issued guidelines for large exposure framework, Scale-based regulation for non-Banking Finance Companies, and Digital LENDING NORMS for SUPERVISED ENTIES. W E Also Make Use of the Other Conventional Measures SUCH As Sectoral Risk Weights, Provisioning Norms, Loan to ValueRatio, AMONG OTHERS, As Macroprudential Tools Flexibly to Address the Occasional Risks That Observed.
9 The rbi & rsquo; S Composite Digital Payment Index Has Increased to 395.6 in March 2023 Up from 100 AS of March 2018.
New Delhi Investment
