BANKABLE INDIA

A strong economy rests on the foundation of sound financial institutions. The Indian economy’s relatively firm footing (see Issue 4 | Volume 1) in the face of turbulent global economic conditions, is also attributable to its financial institutions. While some of the global financial institutions Lehman Brothers Holdings Inc., the Federal National Mortgage Association, Wachovia Corporation, Merrill Lynch & Co., Inc. among others either had to be salvaged or simply cease to exist; 19 Indian financial institutions have made it among the Top 500 Global Financial Brands 2009, released by Brand Finance Plc, in association with U.K.'s The Banker magazine.

Among the 19 Indian financial institutions that have reported an average 35% growth in interest income and a higher 42% jump in net profit for the quarter ended December 2008, 13 new entrants in the Top 500 list this year are state-run organizations highlighting prudential banking norms efficiently steered by the country’s central bank, The Reserve Bank of India (RBI).

However, RBI disappointed the industry by falling short of announcing in its Credit Policy on January 27, any move toward a lower interest regime to boost demand, which was widely expected as an appropriate method to stem the economic downturn. The expectation of further rate cuts was bolstered by the RBI’s own assessment of inflation going down to 3% by March 2009 from the current 6% and a peak of 13% in August 2008.
The government did offer reasons to cheer as it announced cuts in prices of petroleum products twice in the last two months, a decision which will further help contain inflation and lubricate the wheels of the economy.