Monetary Management and Financial Intermediation

The Monetary Policy Committee (MPC) maintained a status quo on the policy repo rate between May 2020 and February 2022 after implementing a 115 basis points (bps) reduction between March 2020 and May 2020.

Developments in the G-sec Market

• After remaining steady through 2020 and 2021, the yield on the 10-year government bond rose in 2022.

Banking Sector

• Consequently, the asset quality of SCBs (Scheduled Commercial Banks) has been improving steadily over the years across all major sectors.
• The GNPA ratio has decreased from 8.2 per cent in March 2020 to a seven year low of 5.0 per cent in September 2022, while Net Non-Performing Assets (NNPA) have dropped to a ten-year low of 1.3 per cent of total assets.
• During the first half of FY23, the profitability of SCBs, measured in terms of Return on Equity (ROE) and Return on Assets (ROA), improved to levels last observed in FY15.

Primary Market

• From April to November 2022, the buoyant performance of the primary market has been observed despite turmoil in global financial markets.
• Compared to FY22, the number of firms opting to list on the bourses increased by 37 per cent, though the amount raised declined to almost half of what was raised in the last year.

Secondary Market

• In April-December 2022, global stock markets declined because of geopolitical uncertainty.
• On the contrary, the Indian stock market saw a resilient performance, with the bluechip index Nifty 50 registering a return of 3.7 per cent during the same period.

Foreign Portfolio Investments

• Global economic factors, such as inflationary pressures, monetary tightening by central banks and recessionary fears in Advanced Economies, exerted pressure on FPIs to sell in Indian markets.
• The overall net investments by Foreign Portfolio Investors during FY23 registered an outflow of Rs.16,153 crore at the end of December 2022 from an outflow of Rs.5,578 crore during FY22 at the end of December 2021.
• Strong macroeconomic fundamentals ensure India remains an attractive destination.

Pension Sector

• In 2021, pension assets in OECD countries stood at US$ 38.5 trillion, 66.9 per cent of the GDP.
• In some of the OECD countries, pension assets were over 100 per cent of the GDP.
• The United States recorded the largest holdings in pension funds, followed by the United Kingdom and Australia.
• During Covid-19, countries undertook unprecedented and swift health and pension-related reforms to address health challenges, limit the impact of the crisis on labour markets, support incomes and adjust macroeconomic policies.
• India’s pension sector provides a flexible mode of old age income-security for salaried employees and the common person.
• In the recent five years, FY18 to FY22, the number of subscribers has multiplied over three-fold, led by APY, and AUM by over four-fold, led by NPS.
• India’s Pension Sector demonstrated remarkable performance during the Covid-19.