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Economic Highlights
AI Crash Jolts Global Aviation:IGNITES PVT Vs PUBLIC DEBATE, By Shivaji Sarkar, 16 June 2025 |
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Economic
Highlights
New Delhi, 16 June
2025
AI Crash
Jolts Global Aviation
IGNITES PVT
Vs PUBLIC DEBATE
By Shivaji
Sarkar
In a single fiery
instant over Ahmedabad, the confidence in civil aviation—India’s and the
world’s—came crashing down with Air India’s ill-fated Dreamliner. The death toll
of 142 plus about another 20 deaths on the crash site at thehospital is tragic,
but the fallout runs deeper. Investor panic, plunging Boeing shares, and over
Rs 1,000 crore in insurance claims expose a volatile mix of corporate
negligence, regulatory failure, and a sector increasingly driven by
cost-cutting rather than caution.
The Tata Group, which
owns Air India, promptly announced a Rs 1 crore compensation per victim—a
gesture as much about damage control as it is about accountability. Aviation
analysts believe this move is less generosity and more recognition of the
magnitude of the crisis—and the global scrutiny that now hovers over India’s
civil aviation, the third largest in passenger volume and sixth in cargo
worldwide. Apart international norms mandate such compensation.
The impact has been
swift and global. The crash has led to circumspection and crashing share prices
rattle investor confidence. Boeing shares dropped by 8 per cent just days
before the Paris Air Show, where the company is expected to showcase its
productions. Boeing CEO Kelly Ortberg has announced cancellation of his visit
to the air show as the crash revived concerns of about Boeings widebody jets.
Boeing’s supplier of 787 fuselage, Spirit Aerosystems; and engine - GE
Aerospace have also suffered 20 per cent losses. Total losses are estimated in
billions of dollars though in percentage terms it might look small.
This crash has
reignited a long-standing debate: is Boeing’s private-sector-driven model more
vulnerable than Airbus, a European government-backed consortium? The
Dreamliner, despite its reputation as a safe aircraft, has faced repeated
technical issues—chief among them, its lithium-ion battery system, which has
caused electrical fires and aircraft groundings in the past across the world, including
by Japan Airlines. These batteries, similar to those used in e-rickshaws around
Delhi, are prone to thermal runaway: a condition where internal heat builds up
uncontrollably, leading to fires, toxic gas release, and even explosions.
In 2018-19 Boeing has
paid $1.1 billion to avoid prosecution for its two 737 Max plane crashes.It has
been mired in such controversies, including last year’s Starliner crash that
stranded Sunita Williams and Butch Wilmore at the international space station
(ISS). There are reports of Boeing workers complaining about shoddy production,
including a claim by whistleblower that the Dreamliner had structural flaws,
said to be six tonnes heavier, than it should be. No Dreamliner had crashed
before the Ahmedabad incident. Another whistleblower, a Boeing engineer warned
in 2024 that all 787s should be grounded due to structural flaws. One who
reportedly expressed concerns about substandard spares, was later found dead
under mysterious circumstances.
The Ahmedabad tragedy
also highlights vulnerabilities in India’s aviation ecosystem, increasingly
dominated by just two players—IndiGo and Tata group airlines (Air India and
Vistara)—which together control nearly 90 percent of the market. This
quasi-duopoly, despite Udaan and other regional airline schemes, limits
competition and raises concerns over pricing, service quality, and most
alarmingly, safety.
Flying is becoming
costlier and more fragile. High aviation fuel costs in India—among the world’s
highest—along with supply chain constraints have pushed airlines to cut
corners. There are growing passenger complaints about air-conditioning being
kept off during boarding to save fuel. Some aircraft remain grounded for lack
of spares—especially engines from Pratt & Whitney. As of this year, 133
aircraft across airlines of India or 16 percent of the fleet were grounded.
The Directorate
General of Civil Aviation (DGCA) fined Akasa Air, Air India, and IndiGo for
repeated safety violations. SpiceJet was ordered to halve its operations in
2022. The Bureau of Civil Aviation Security (BCAS) has also levied multiple
penalties—for instance, Rs 30 lakh on Air India and over Rs1 crore in fines on
airport operators across Lucknow, Bhavnagar, Chennai, and Delhi for violating
the 1937 Aircraft Rules. This year Mumbai airport was also penalised for ignoring
safety.
Most recently, DGCA
inspections of Turkish Airlines flights between May 29 and June 2, 2025,
revealed alarming safety breaches—unauthorized ground personnel at Bengaluru,
missing documentation for dangerous cargo, and unaccounted equipment at Hyderabad
and Chennai airports.
Statistically, Boeing
appears to fare worse than Airbus on safety metrics in the U.S. Since 2014,
Airbus aircraft have faced 10 technical malfunctions, but no fatal crashes.
Boeing, in contrast, has reported 32 malfunctions and multiple fatal issues.
While more Boeings are in operation, the frequency of groundings and incidents
raises red flags.Despite this, the Tata Group has inked a massive deal for 500
Boeing aircraft to be delivered over the next decade—a stark contrast from
earlier decades when India, through Indian Airlines and Air India, maintained a
balance between Boeing and Airbus procurement under public ownership.
Every time an
aviation tragedy strikes, the default explanation tends to be “pilot or human
error.” While human error is real, this narrative often absolves aircraft
manufacturers and operators of deeper accountability. In the Ahmedabad case,
it’s imperative that investigations go beyond the cockpit and scrutinize
systemic safety lapses, fleet maintenance records, battery safety, and
manufacturing standards.
The DGCA’s report on
an earlier in-flight shutdown incident on a B-787 (VT-ANW) in August 2023 is
one of many warning signs. In November that year, the government admitted in
the Rajya Sabha that 18 safety violations had been recorded across airlines,
airports, and ground service providers in just three years.
The aviation
sector—by design—cannot afford to operate on the edge. When corporate profit,
regulatory apathy, and weak oversight intersect, the result is not just
turbulence—it’s tragedy. The Ahmedabad crash is not just an accident; it is a
wake-up call. India’s aviation authorities must seize this moment to launch a
full-scale, independent safety audit of all domestic fleets. Because in the sky,
there is no room for error, and no margin for complacency.---INFA
(Copyright,
India News & Feature Alliance)
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Trilateral Dialogue in Beijing: China’s Model of Stabilization or Regional Dominance? By Piotr Op |
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Spotlight
New
Delhi 14 June 2025
Trilateral Dialogue
in Beijing
China’s Model of
Stabilization or Regional Dominance?
By Piotr Opalinski
On May 21, 2025, an informal, tripartite meeting of
the foreign ministers of China, Wang Yi, Pakistan’s Ishaq Dar, and Afghanistan’s
Amir Khan Muttaqi was held in Beijing. The aim of this Chinese initiative was
to ease tensions between Islamabad and Kabul, which had intensified after the
deportation – from April 1, 2025 – of over 84,000 Afghans from Pakistan under
the second phase of the Illegal Foreigners Repatriation Plan. The meeting also
served as a platform for dialogue on deepening economic and infrastructure
cooperation, including the extension of the China-Pakistan Economic Corridor
(CPEC) project to Afghanistan. It was announced that the next round of talks
would be held in Kabul.
China
pursues a highly pragmatic policy towards the Taliban government. Despite the
lack of formal recognition, it maintains full diplomatic relations at the
ambassadorial level – indicating de facto recognition resulting from strategic
and economic calculations. This pragmatic approach is driven by both security
considerations – particularly those related to the situation in the Xinjiang
region and countering extremism – and important economic interests.
Chinese
companies have already signed concession agreements with the Taliban
government, including in the field of oil extraction (USD 540 million), and are
also planning investments worth USD 10 billion in the lithium deposits sector.
Work is underway to launch a copper mine in Mes Aynak – one of the largest
unexploited deposits of this raw material in the world, managed by the Chinese
company MCC. Beijing is also financing the construction of road infrastructure,
including a route connecting Badakhshan province with Chinese Xinjiang via the
Wakhan Corridor. These investments not only strengthen China's economic
presence, but also aim to create a safe transport corridor, bypassing areas not
controlled by the Taliban.
From
a security perspective, Beijing expects the Taliban to firmly curb the
activities of Islamist groups that threaten China, especially the East
Turkestan Islamic Movement (ETIM). Chinese authorities have consistently
emphasized that Afghan territory cannot be used as a base of operations for separatist
groups.
China’s
relations with Pakistan are strategic and long-term. Islamabad is considered by
Beijing as an “iron friend for all seasons,” which is reflected in
infrastructure, economic and military cooperation. Of fundamental importance is
the expansion of CPEC, a flagship project of the Belt and Road Initiative
(BRI), which provides China with land access to the Indian Ocean through the
port of Gwadar.
Beijing
is pressuring Pakistan to step up protection of Chinese investments and
personnel in the face of repeated terrorist attacks. The joint coordination of
policies toward Afghanistan aims not only to limit the influence of armed
groups but also to create effective trade routes and promote stability in the
difficult border region.
The
Beijing meeting is part of China's broader strategy of building a regional
security architecture independent of Western influence. The tightening of
cooperation with Pakistan and Afghanistan can be interpreted as an attempt to
form a "regional stabilization triangle" based on diplomacy,
infrastructure investment and energy security.
Extending
CPEC to Afghanistan could transform the country into a regional trading hub ,
linking the Middle East, Central Asia, and Europe. While the project promises
economic growth and stability, it has also drawn opposition—particularly from
India—that has hindered broader regional integration and increased the risk of
geopolitical polarisation.
India
has expressed strong opposition to the expansion of the China-Pakistan Economic
Corridor into Afghanistan, viewing it as a violation of its sovereignty and a
threat to its strategic interests in the region. The main sticking point is the
fact that CPEC runs through the Pakistan-administered part of Kashmir, which
India considers an integral part of its state. As such, any infrastructure
projects in this area are considered illegal and unacceptable by New Delhi.
Expanding
CPEC also raises concerns in India about the strengthening of China and
Pakistan in the region, which could undermine New Delhi’s strategic ambitions
in Central Asia. India has invested heavily in developing the Chabahar port in
Iran, which is expected to provide a key link in an alternative trade route to
Afghanistan and beyond to Central Asia. Including Afghanistan in CPEC could
limit the significance of this project and reduce India’s influence in the
region.
In
addition, New Delhi is concerned that China's presence in Afghanistan could
increase security threats, including the risk of Afghan territory being used by
groups operating against India. New Delhi therefore appeals to the
international community to heed these concerns and refrain from supporting
projects which it believes have the potential to deepen instability and
perpetuate geopolitical divisions.
Although
New Delhi does not formally recognise the Taliban government, it maintains
pragmatic contacts with it – mainly concerning security and trade, motivated by
strategic considerations and concern for its own interests in the region. According
to unofficial media reports, in early May, during the escalation of
Indian-Pakistani tensions after the Pahalgam attack, Mullah Muhammad Ibrahim
Sadr, the Taliban's deputy interior minister for security, was supposed to be
in the Indian capital. A few days later, on May 15, Foreign Minister
Subrahmanyam Jaishankar had a telephone conversation with the acting head of
Afghan diplomacy Amir Khan Muttaqi, thanking him for condemning the attack and
distancing himself from the Pakistani narrative. Issues of economic, visa and transport
cooperation were also raised, including the use of the Chabahar port bypassing
Pakistani territory.
In
addition, despite the closed border crossings with Pakistan, India allowed 160
Afghan trucks carrying dried fruits to enter through the Wagah-Attari border.
These actions indicate India's pragmatic approach, which is trying to secure
its interests in Afghanistan and balance the influence of China and Pakistan in
the region.
Through
simultaneous diplomatic engagement towards Pakistan and Afghanistan, China is
consistently building a narrative of its own role as a mediator and guarantor
of regional stability. Its infrastructure and economic investments are both a
tool for building influence and a challenge to regional and supra-regional
powers such as India and the United States.
Beijing
knows that its presence in Afghanistan and involvement in projects such as CPEC
will be met with further criticism and resistance from many countries, notably
over sovereignty issues and ethnic and religious tensions. But it’s clear
“connector” strategy – between Central Asia, South Asia and the Middle East –
points to China’s growing role as a regional leader.
The
meeting in Beijing is an important step towards building a trilateral format of
cooperation that can bring stability, but also potentially contribute to new
divisions in South Asia. The China-Pakistan-Afghan "triangle " shows
that the geopolitics of this region is taking on a new dimension, combining
economic interests with security challenges and great-power rivalry. The
development of the situation will depend on the parties' further ability to
compromise, which may prove to be particularly difficult due to the deep
prejudices and distrust between Kabul and Islamabad, as well as the reactions
of external actors, especially India and the US, which will not easily accept
Beijing's growing influence.---INFA
(Copyright,
India News & Feature Alliance)
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The Ukraine War: NEW DELHI MUST REENGAGE, By Dr. D.K. Giri, 13 June 2025 |
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Round The World
New
Delhi, 13 June 2025
The Ukraine War
NEW DELHI MUST
REENGAGE
By Dr. D.K. Giri
(Prof of Practice,
NIIS Group of Institutions)
The
rivalry with Pakistan leading to a limited 88-hour war has deflected India’s
attention on the war in Ukraine. However, the tell-tale experience of the war
should nudge India to reengage with Russia-Ukrainian war. It is so critical as
the war with Pakistan has revealed the crux in India-European ties, so-called
India-American growing friendship, India-Russia historical relations and
India-China continued antagonism. One could surmise that India’s position and
role (or lack of it) had a visible bearing on India-Pakistan war.
The
war in Ukraine is rapidly descending into a catastrophe for Europe and by
implication, most of the world. The battle is now full-blown with no holds
barred. Russia is hurling swarms of drones and missiles at Ukraine. This
ceasefire has not happened despite Donald Trump’s tall claim that he was to
bring it about in days after assuming the office for the second term. In fact,
he was trying to seduce a tiger which had tasted blood with sweet talks.
Vladimir Putin sized up Trump and realised that the latter had no gall to
militarily back Ukraine. So, conversely, Putin intensified the war aiming at a
total victory. He perhaps, thinks that Europe is no match for his military
power or nuclear deterrence. Apparently, Ukraine is hitting back with
calculated military plans like Operation Spiderweb.
Kyiv
is claiming to retaliate to bullet to bullet, drone to drone and has downed
several Russian aircrafts. But the obvious reality on the ground is that Russia
is inching forward and nibbling away territories and towns of Ukraine. Europe
is not able to resist despite its full backing to Ukraine. NATO spending has
increased. Germany has unblocked funds for military expenditure. European
countries, mainly the border states like Sweden, Norway and Poland are
undertaking massive preparations to face the expansion of war into their
respective territories. Denmark Foreign Minister supposes that Putin will
attack Europe in less than five years. Indeed, if unchecked, the Ukrainian war
could spiral into entire Europe.
The
situation became worse for Europe after Trump returns to the White House. He
told off Europe and asked them to prepare and pay for their own defence. He
almost threw NATO under the buss. Left alone, Europe cannot match Russia’s
nuclear power or military strength. The former is only a deterrent, but the
tactical nuclear bombs could be used. Putin has already threatened that he
could used them. Its non-use has been attributed to Prime Minister Modi who
persuaded Putin against it. Militarily Russian army is 1.5 million strong.
Where
does India stand on Ukrainian war? It has been neutral since it started. New
Delhi harped on diplomacy and dialogue to resolve the problem. This stance
amounted to tacitly supporting Russia which is the invader and has been
increasingly occupying Ukrainian land. New Delhi stuck to its policy of
strategic autonomy and Vishwabandhu (friend of the world). India’s war
with Pakistan has exposed the limitations of these approaches. If dialogue and
diplomacy are the way to go, why is New Delhi open to dialogue with Pakistan?
Prime Minister Modi has maintained that there can be no dialogue with Pakistan
until terrorists are publicly disowned. After the recent war, Modi has added
another pre-condition for dialogue, which is return of PoK to India. Apply the
same approach to Ukraine. How can Ukraine dialogue with a country that is
occupying its territory? The dialogue can start if the war stops or ceased.
It
is now obvious that Vladimir Putin did not invade Ukraine to prevent it from
joining NATO. Zelenskyy will be more than willing to give up any desire of
joining NATO if his country’s territorial integrity and security is respected
by Russia. From the course of the war, it is not hard to realise that Putin
wants complete subjugation of Ukraine. Will India still be sympathetic to
Russia’s position and witness the forceful takeover of Ukraine?
The
fallout of India’s neutrality, strategic autonomy or multi-alignment could be
seen in India-Pakistan war. No European country openly came in support of India.
There is no quid pro quo in Pakistan and Ukraine. The game is not over in
Ukraine, nor Asia Pacific, where India is facing an adversarial China-Pakistan
axis. It is time India re-focussed on Ukraine, did the course-correction and
revive partnership with Europe. As such, New Delhi is individually friendly
with many European countries.
As
India and Europe go for the re-set of their bilateralism, let us deal with the
elephant in the room, that is Russia – India’s historical security and defence
ties with the country. But times have changed. Is Russia protecting India’s
interest against China? Moscow and Beijing have a strong ‘eternal bond’. China
is poking India off and on and now with its proxy state Pakistan. Russia has
not deterred China against India. So is it not wise for India to negotiate with
Europe and America who could ably support India to take on China?
New
Delhi should work with individual countries of Europe. In this new strategy, Poland
is a case in point. It borders Russia, has been invaded and occupied by its
former incarnation USSR. Warsaw has become a part of EU and NATO, has bilateral
security ties individual countries like France. Warsaw has just decided to
train every adult in warfare to raise its military strength to 500,000
personnel. India could team up with Poland in ending the Ukrainian war. If that
happens, Poland could be more vocal and nudge other EU countries to back India
against China. India and Poland have upgraded their ties to strategic
partnership. Modi visited Poland last year and en route to Kyiv, 45 years after
PM Morarji Desai had been there.
It
is time for India to seriously rethink its strategy vis-à-vis Ukraine. It may not
take sides, but could pull all stops to stop the war. Trump is failing, which
does not mean no one else can succeed. Prime Minister Modi could. He can bring
about reconciliation between Russia and the West. That will be the safest bet
for India. New Delhi can no longer remain aloof from Ukrainian war. The world
security depends on the resolution of this continuing war in Europe. Let us
remember that the security players in the world consist of America, Europe,
Russia and China. How can India stay away from this security apparatus and
isolate itself? ---INFA
(Copyright, India
News & Feature Alliance)
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China Weaponises Brahmaputra: NEW DELHI MUST REACT, 7 June 2025 |
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Round The World
New
Delhi, 7 June 2025
China Weaponises Brahmaputra
NEW DELHI MUST REACT
By Dr. D.K. Giri
(Professor of Practice, NIIS Group of
Institutions)
China has apparently
threatened to curtail the flow of Brahmaputra water to India. This is in
retaliation to New Delhi suspending the Indus Water Treaty with Pakistan. It
may be Islamabad’s bluff to garner international support against India’s recent
military action. Whatever may be the provocation for Beijing to take this
drastic action, New Delhi must give a strong reaction. In fact, China needs no
excuse to work against the interest of India.
Beijing’s belligerence
against New Delhi is no secret. It has been doing so ever since it acquired
Tibet by hoodwinking Jawaharlal Nehru. Giving away Tibet conceded the advantage
to China in geo-political and security terms. Tibet was created by the British
Colonial administration as a buffer state between India and China. Nehru did
not secure any reciprocal obligations for letting Tibet go to China. The river
Brahmaputra originates from Tibet. However, Chinese threat on Brahmaputra may
not inflict a fatal blow to India.
River water experts suggest
that China controls at the most 30 per cent of Brahmaputra water and the rest
70 per cent or more is generated in India. The river grows after entering the
Indian soil. The river is enriched by several tributaries and the water flowing
down from Khasi, Garo and Jaintia Hills. The tributaries into Bramhaputra are
Subansiri, Lohit, Kameng, Manas, Daansiri, and Jia Bharali China could not
control the water discharged in India. However, the dam building on Brahmaputra
river, storing the water and diverting it is a cause of concern.
Dams are built on the upper
side of the river. So if the dam burst accidentally or is broken deliberately, India
as a riparian state will suffer, the North Easten states will be submerged with
heavy toll on life and property. The second probability is remote as China will
not try to damage parts of India by flooding them unless both countries are at
war. That should demystify the so-called Damocles sword hanging over India in
Brahmaputra river.
The larger point is how has
India got into this situation where it is being targeted by Pakistan and China
and is kept afar by other countries. Even the United States which is perceived
to be engaging India as a counterweight to China seems to have “unfriended” it.
Only a few days before, the American Secretary of Trade, openly and rather
undiplomatically told off India for being part of BRICS, i.e. at the behest of
Beijing, is seeking to de-dollarise the world economy; and doing brisk business
in the face of sanctions with the other member, Russia.
At the same time, it is
worrying to realise that in the recent war with Pakistan, not a single country
came out openly for India. Various arguments could be made about the current
India’s foreign policy strategy. A good many observers thought that the recent
war with Pakistan sounded a wake-up call to India. Again there were several
interpretations of that call. I proffered my perspective in this column only
last week. Let me expand on that formulation.
India is left alone in the
international community for its faulty conception of world politics and thus
the consequent struggle to find friends in need. That is that a multipolar
world exists or can be constructed. That India can represent one pole, or can
be a part of more than one pole. That India can lead the developing world. That
New Delhi’s approach of strategic autonomy enables India to deal with any
country at the same time— Ukraine and Russia, Israel and Iran, China and Taiwan
and so on.
Some of us have debunked
these formulations many times. It needs to be told and time again until the
leadership heeds it in the interest of India. Thankfully, Prime Minister Modi
has taken a correct position against Pakistan. He could do the same on China.
But he seems to be bedevilled by the lack of committed international support
against Beijing, also in the absence of correct inputs on China. It should have
come from the Foreign Minister Jaishankar who served in China as India’s
ambassador. Alas, Jaishankar has failed to click on China.
The present foreign policy
strategy that is unmaintainable could be attributed to the External Affairs Minister.
His combative, seminarian, self-righteous, almost narcissist style has failed
to befriend countries. The Prime Minister with his personal warmth and charisma
could get many a world leader to openly stand by India if he had a foreign
minister who understood India’s critical security needs. If he did, Modi would
not have sent delegations of MPs to explain Indian positions.
Modi made a profound
statement on how to navigate international politics. He said, “the road to
peace is paved by power”. This was in the context of Pakistan. But that could
apply to all countries. Now here is where Modi is let down by his foreign
minister. How does India deal with Pakistan and its friend China. When
China-Pakistan alliance is established which mobilises support from other
countries, who does India stand with. Or is it the case that India does not have
allies and it plans to take on China and its friends or Pakistan with its
friends.
Remember that someone who is
every body’s friend is no body’s friend. Even in Mahabharata, both sides of the
battle, both Kauravas and Pandavas went around making Allies. Both armies were
invincible, yet they both actively sought partners. Even Lord Krishna offered
Himself and his army to either party. Jaishankar has succeeded in making India
friendless. Even the United States is perhaps reviving its patronage to
Pakistan.
Last word in this piece is,
if New Delhi focussed its foreign policy on countering China, things would have
fallen in place. India has had a reactive China policy, it is time to revise it
and have a pro-active China policy which puts Beijing on the defensive. It is
not too late to make that dramatic and drastic shift in India’s China strategy.---INFA
(Copyright, India News & Feature Alliance)
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Banking Sector: PROFITABILITY INCREASES, By Dhurjati Mukherjee, 11 June 2025 |
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Open Forum
New Delhi, 11 June 2025
Banking Sector
PROFITABILITY INCREASES
By Dhurjati Mukherjee
The banking sector has been in good health. Most banks are earning high
profits and attracting investors in the capital sector. This is reinforced by
the fact that the Reserve
Bank of India’s board approved a record surplus transfer to the central
government of Rs 2.68 lakh crore for the accounting year 2024-25. This is higher
than Rs 2.1 lakh crore that the central bank paid as dividend to the Centre in
2023-24and marginally higher than Rs 2.56 lakh crore dividend receipt that
the government has been expecting from the RBI and public sector banks.
The higher-than-expected pay-out will bring
down rates with analysts expecting the yield on government bonds to come down
further. According to Aditi Nayar, Chief Economist at ICRA, the RBI’s dividend
exceeds Budget assumptions by around Rs 40,000-50,000 crore or 11-14 basis
points of GDP. The government will obviously feel financially benefited and
would be in a position to manage additional spending.
The banking sector’s Q4 consolidated net profit crossed Rs 1 lakh crore
for the first time. Public and private sector banks together posted a net
profit of Rs 100,178 crore in Q4 of financial year F25, up 9 percent from Rs
91,829 crore in the year-ago quarter. This growth came despite a squeeze in net
interest margins as lending rates fell, following RBI’s February rate cut while
deposit costs stayed high. Lenders, however, offset the impact through treasury
giants and recoveries from bad loans.
Private sector banks posted a relatively modest 5.2 percent rise in net
profit to Rs 50.877 crore from Rs 45.214 crore. Among PSUs, four banks -- SBI
(40 percent), Bank of Baroda (10.8 percent), Canara Bank (10.3 percent) and
Union Bank (10.1 percent) – contributed around 80 percent of the profits.
However, SBI was the only PSU bank to report a decline with net profit falling
8 percent to Rs 19,941 crore.
Another
recent development has been an aggressive cut in repo rate by 0.5 percentage
points, double than what was expected, and reduction in cash reserve ratio by
one percentage point, a move that would go down well for the sector as also for
borrowers. This third consecutive reduction is expected to provide a
much-needed boost to real estate demand. Coming on the heels of a slight dip in
sales during Q1 2025, the timing of this rate cut could help revive momentum in
the real estate sector. Homebuyers are expected to benefit from an improved
home loan affordability, particularly first-time buyers and those targeting
affordable housing, as it is expected that banks would pass on the rate cut to
consumers.
Apart from loans becoming cheaper, statistics
reveal that the share of bank deposits in major cities has risen to 53.2
percent in March 2025 from 50.9 percent in 2020 even as their share in bank
credit declined to 58 percent from 63 percent during the same period last year.
The move is seen as a progress towards a policy goal of equitable distribution
of bank funds across regions. This is due to the movement of people and capital
from metros to semi-urban areas. These regions have seen a rise in their share
of deposits. As of March 2025, total individual deposits stood at Rs 234.5 lakh
crore of which, metros accounted for Rs 124.8 lakh crore, urban centres Rs 49
lakh crore, semi-urban areas Rs 36.2 lakh crore and rural areas Rs 24.4 lakh
crore.
However, while all this augurs well for the
sector, the amount of fraud in scheduled commercial banks has seen a sharp
increase in 2024-25 to Rs 36,014 crore from Rs 12,230 crore in the previous
fiscal, even as the number of frauds has seen a decline of 33.5 percent from a
little over 36,000 in FY24 to 23,953 in FY25. Private sector banks lead in
terms of the number of frauds, constituting 67.2 percent of frauds during the
year. According to RBI, the increase has mainly been attributed to “the
removal of fraud classification in 122 cases amounting to Rs 18,674 crore
reported during previous financial years and reporting afresh during the
current fiscal after re-examination and ensuring compliance with the judgment
of the apex court of March 27, 2023”.
The Supreme Court had directed the banks to
give time and offer a detailed explanation to the account holdersand also asked
the RBI to issue new directives towards the same. It is understood that the
RBI’s department of supervision plans to enhance liquidity stress tests for
scheduled commercial banks through advanced cash flow analysis. This aims to
assess banks’ ability to withstand extreme but plausible stress scenarios,
ensuring they can meet obligations during crisis. As per banking industry
officials, the threat landscape is rapidly evolving with fraud detection,
particularly in the form of mule accounts, money laundering, QR-based frauds
and digital lending becoming a priority.
The health of the banking sector has been reflected in the recent RBI
report. In fact, with higher profits and lower NPAs, banks would be in a better
situation to lend, thereby helping entrepreneurs with financial resources.
However, it needs to be stated here that while top and middle-level
industrialists are getting adequate loans from banks and financial
institutions, small and micro level entrepreneurs have great problems in
arranging their financial needs. This aspect needs to be looked into.
The only point of concern has been the increase in frauds which needs to
be detected. Both the individual banks and the RBI must join hands to ensure
that these numbers are brought down, and the common man does not suffer due to
siphoning off their hard-earned money. Apart from this, the banking personnel
should extend a helping hand to those not quite educated and unaware of banking
rules and regulations, some of which are quite complicated.
It goes without saying that a vibrant economy needs a strong banking
system. Thus, for the sector to thrive, there should be no interference with
its operations and loans should be sanctioned by professionals only on merit
and not on political pressure. Already Mudra loans are reaching small traders
and entrepreneurs, and this should be encouraged by public sector banks with the
help and support from the government.
Though the banking network has spread across the country, there should
be special endeavour to bring people from the economically weaker sections to
open accounts, specially in PSUs. As the economy emerges strong, a lot depends
on the work of banks to help provide financial assistance to professionals and
entrepreneurs.---INFA
(Copyright, India News & Feature Alliance)
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