RBI’s Annual Report 20­22-2023 announced

The Annual Report 2022-23 of the Reserve Bank of India (RBI) has been published, presenting an overview of the RBI’s operations during the fiscal year that ended on March 31, 2023.

RBI’s Annual Report 20­22-2023 

The Annual Report 2022-23 of the Reserve Bank of India (RBI) has been published, presenting an overview of the RBI’s operations during the fiscal year that ended on March 31, 2023. This report, as per the provisions of Section 53(2) of the RBI Act, 1934, has been submitted to the Central Government. In FY23, India has witnessed a stable macroeconomic and financial environment, characterized by consistent growth. Over the past five years, India’s contribution to global growth has averaged more than 12%.

RBI’s Annual Report 20­22-2023, Highlights of the RBI’s Annual Report

a). Assessment and Prospects of Domestic Economy:

i. Growth: As per the second advance estimates (SAE) of national income released by the National Statistical Office (NSO), the Indian economy is expected to have achieved a 7.0% growth in real Gross Domestic Product (GDP) in FY23, compared to 9.1% in FY22.

ii. Inflation: Overall, headline inflation increased to 6.7% in 2022­23 from 5.5% in 2021­-22. Inflation reached a peak of 7.8 per cent in April 2022 due to sharp increase in global prices of crude oil, food, fertilisers and metals.

iii. Deficit and Debt:

i. The general government deficit and debt moderated to 9.4% and 86.5% of GDP, respectively, in FY23 from the peak levels of 13.1% and 89.4% in FY21, respectively.
ii. The gross fiscal deficit (GFD) of the government declined from 6.7% of GDP in FY22 to 6.4% of GDP in 2022-­23.
iii. India’s current account deficit (CAD) was at 2.7% of GDP during April­-December 2022.

b). FDIs are at their lowest since FY20

1. According to the annual report of the Reserve Bank of India (RBI), the total Foreign Direct Investment (FDI) received by India in FY23 reached a three-year low of USD 46 billion. This amount is 26% lower than the FDI recorded in the previous fiscal year (FY22), which was USD 58.8 billion. In comparison, the FDI flow in FY21 was USD 59.6 billion, and in FY20, it was USD 50 billion. Furthermore, the net capital inflows under FDI were also lower in FY23 at USD 28.0 billion, compared to USD 38.6 billion in FY22.
2. The surplus liquidity absorbed under the LAF (Liquidity Adjustment Facility) moderated from a daily average of Rs 6.6 lakh crore in March 2022 to Rs 0.14 lakh crore in March 2023.
3. India emerged as the largest player in real­time transactions at the global level, with a 46% share in 2022.

Note: FDI in the manufacturing sector fell 30% to $11.3 billion in 2022-­23 on an annual basis.

c). Non-­Performing Assets:

The Gross Non-Performing Assets (NPA) as a share of total advances has decreased from 15.5% in 2018-19 to 5.8% in the quarter ending December 2022. Although public sector banks still have higher NPA ratios, they have witnessed a significant reduction in their NPA ratio.

d). Merchandise Trade

1. India’s merchandise exports at USD 450.4 billion recorded a growth of 6.7%in FY23 as compared with 44.6% in FY22.
2. India’s merchandise imports at USD 714.0 billion recorded a growth of 16.5% in FY23.
3. Petroleum, oil and lubricants (POL) imports constituted the largest item in India’s import, accounting for 29.3% of the overall imports in FY23.
4. Gold imports at US$ 35.0 billion declined by 24.2 per cent in 2022-­23.
5. India is the largest importer of vegetable oil globally. India’s import bill on vegetable oil rose to USD 20.8 billion in 2022­23 from USD 19.0 billion in FY22.

e). DICGC’s Deposit Insurance

1. To protect the small investors, DICGC offers deposit insurance of Rs 5 lakh (including the principal and interest amount) per depositor for each bank (within 90 days) in the event of the bank being unable to fulfil its commitment due to liquidation or cancellation of the banking licence. Deposit Insurance and Credit Guarantee Corporation (DICGC), which is constituted under the DICGC Act, 1961 is wholly­owned by the RBI.
2. The deposit insurance extended by DICGC covers all commercial banks including local area banks (LABs), payments banks (PBs), small finance banks (SFBs), regional rural banks (RRBs) and co­operative banks, that are licensed by the Reserve Bank.
3. As on March 31, 2023, the number of registered insured banks was about 2,027, which include 140 commercial banks (including 43 RRBs, two LABs, six PBs and 12 SFBs) and 1,887 co­operative banks [33 state cooperative banks, 352 district central cooperative banks and 1,502 urban cooperative banks (UCBs)].

4. Key Facts

• The number of fully protected accounts (294.5 crore) in FY23 constituted 98.1% of the total number of accounts (300.1 crore).
• In terms of amount, the total insured deposits of Rs 83,89,470 crore in FY23, constituted a Rs 46.3% of assessable deposits of Rs 1,81,14,550 crore.
• During FY23, the DICGC has sanctioned supplementary claims of 11 liquidated banks aggregating Rs105.8 crore under Section 16 (1) of the DICGC Act, 1961.
• In FY23, it has also settled claims of 28 banks under ‘All Inclusive Directions (AIDs)’of the RBI aggregating Rs 646.8 crore.
• The size of the Deposit Insurance Fund (DIF) stood at Rs1,69,263 crore (Provisional) as on March 31, 2023, yielding a reserve ratio (DIF/insured deposit) of 2.02%.
  
• 5. An insured bank is required to submit its claim within 45 days of imposition of AID after which the DICGC would get the claims verified within 30 days and pay the depositors within the next 15 days.
• f). Lending rates are back to pre­covid levels
• Banks’ deposit and lending rates increased in FY23 along with a 2.5% points increased in the policy repo rate.
• In response to increase in the policy repo rate in FY23, banks raised their external benchmark­based lending rate (EBLR).
• The 1­year median marginal cost of funds­based lending rate (MCLR) of banks also increased by 1.5% points in FY23.
• g). Bank’s Fraud Analysis
• In FY23, as per the assessment of bank group­wise fraud cases over the last three years private sector banks reported the maximum number of frauds, whereas the public sector banks continued to contribute maximum to the fraud amount.
• 13,530 cases of bank frauds are identified in 2022­23 involving an amount of Rs 30,252 crore compared to 9,097 frauds amounting Rs 59,819 crore in 2021 22. The report highlighted that proportionately, the decline in the total amount involved in frauds continued during 2022­23, with a reduction of 49 per cent over 2021­22.
• Frauds on advances, which includes wilful loan defaults have decreased in the last two years from Rs 1.3 lakh crore to Rs 28,792 crore in 2022­23. Close to 70% of the amount involved in total bank frauds were in public sector banks.
• In terms of Numbers, frauds have occurred predominantly in the category of digital payments (card/internet).
• In terms of of value, frauds have been reported primarily in the loan portfolio (advances category).
• h). Rise in RBI’s total income in 2022­23 by 47.06%
• In FY23, the Reserve Bank of India (RBI) witnessed an increase in the size of its balance sheet by Rs 1,54,453.97 crore, which is equivalent to a growth of 2.50%. The balance sheet expanded from Rs 61,90,302.27 crore in FY22 to Rs 63,44,756.24 crore in FY23.
• The RBI’s income showed a significant rise of 47.06% to reach Rs 2.35 lakh crore in FY23, while the expenditure increased by 14.05% to reach Rs 1.48 lakh crore.
• The overall surplus for FY23 amounted to Rs 87,416.22 crore, indicating a substantial increase of 188.43% compared to the surplus of Rs 30,307.45 crore in FY22. In previous years, the surplus stood at approximately Rs 99,122 crore in FY21, Rs 57,127.53 crore in FY20, and Rs 1,75,987.73 crore in FY19.
• The supply of banknotes during FY23 totaled 2,26,002 lakh pieces, reflecting a 1.57% increase from FY22 (2,22,505 lakh pieces). However, the expenditure on printing banknotes decreased from Rs 4,984.80 crore in FY22 to Rs 4,682.80 crore in FY23.

LIC Raises Stake in Tech Mahindra to 8.88% Through Open Market Transactions

LIC’s decision to increase its stake in Tech Mahindra underscores the insurance behemoth’s confidence in the IT services provider.

Insurance giant Life Insurance Corporation of India (LIC) has increased its equity shareholding in IT services provider Tech Mahindra through a series of open market transactions over a period of more than six months. LIC’s stake in Tech Mahindra has risen from 6.869 percent to 8.884 percent, with an increase of 2.015 percent during the period from November 21, 2022, to June 6, 2023. This move demonstrates LIC’s confidence in Tech Mahindra’s prospects and highlights the growing importance of the IT sector in India’s financial landscape.

Increasing Stake and Shareholding:

LIC announced that it has acquired additional equity shares in Tech Mahindra through open market purchases, raising its stake from 6.69 crore to 8.65 crore equity shares. The insurance behemoth’s shareholding in the company rose from 6.869 percent to 8.884 percent. The average buying price for these shares stood at Rs 1,050.77 per share. As of March 2023, LIC held a 8.07 percent stake, equivalent to 7.86 crore equity shares, in Tech Mahindra.

Confidence in Tech Mahindra:

LIC’s decision to increase its stake in Tech Mahindra signifies the company’s confidence in the IT services provider. Tech Mahindra, a part of the Mahindra Group, is a leading player in the global IT industry, offering a wide range of services including digital transformation, consulting, and business process outsourcing. The company’s strong market position and consistent growth have attracted the attention of investors like LIC.

Implications for Tech Mahindra:

LIC’s increased stake is expected to have a positive impact on Tech Mahindra’s financial stability and growth prospects. The additional investment by LIC indicates that the insurance giant sees value in the company and believes in its ability to generate long-term returns. This endorsement from a reputable institution like LIC could also enhance Tech Mahindra’s reputation among potential investors and stakeholders.

Market Response:

Following the announcement, Tech Mahindra’s share price closed at Rs 1,095.65 on the BSE, reflecting a 0.9 percent increase. However, it is worth noting that the stock experienced a decline of nearly 8 percent in the current calendar year. The market’s reaction suggests a cautious optimism regarding the company’s performance, with investors taking into account the broader market conditions and industry dynamics.

India Successfully Flight-Tests New-Generation Ballistic Missile ‘Agni Prime’

The successful flight test of ‘Agni Prime’ reaffirms India’s position as a competent player in the field of advanced missile technology.

In a significant achievement for India’s defense capabilities, the Defence Research and Development Organisation (DRDO) successfully conducted the maiden pre-induction night launch of the new-generation ballistic missile ‘Agni Prime.’ The test, held at the Dr APJ Abdul Kalam Island off the coast of Odisha, showcased the missile’s exceptional accuracy and reliability, meeting all objectives set for the trial.

Validation of Accuracy and Reliability

The recent launch of ‘Agni Prime’ marked the first pre-induction night launch following three successful developmental trials of the advanced ballistic missile. The flawless execution of these developmental trials demonstrated the system’s superior accuracy and reliability, setting the stage for the latest test.

Comprehensive Range Instrumentation:

To capture vital flight data covering the entire trajectory of ‘Agni Prime,’ an array of range instrumentation systems was deployed at strategic locations. These included radar, telemetry, and electro-optical tracking systems, strategically positioned on the island and two down-range ships. The comprehensive data collection facilitated a meticulous assessment of the missile’s performance, further bolstering its credentials.

Key Observers Witness the Successful Flight Test

The successful flight test of ‘Agni Prime’ was witnessed by esteemed officials from the DRDO and Strategic Forces Command, who closely monitored the missile’s trajectory and performance parameters. Their presence at the event highlighted the significance of the test and reflected the nation’s commitment to enhancing its defense capabilities.

Pathway to Induction into Armed Forces

The flawless execution of the pre-induction night launch of ‘Agni Prime’ marks a crucial milestone in the missile’s journey towards being integrated into the armed forces. The test’s success validates the confidence in the system’s operational readiness and showcases its potential to significantly augment India’s defense capabilities. With this achievement, India takes a significant step forward in strengthening its deterrence capabilities and bolstering national security.

Recognition from the Defense Minister

Defence Minister Rajnath Singh conveyed his heartfelt congratulations to the DRDO and the armed forces for the successful test of ‘Agni Prime.’ The minister’s appreciation reflects the government’s unwavering support for indigenous research and development efforts in the defense sector. The successful flight test of ‘Agni Prime’ underscores India’s commitment to self-reliance in defense technology and its pursuit of excellence in safeguarding the nation