Repo rate was maintained at 4 per cent in 2021-22.
RBI undertook various measures such as G-Sec Acquisition Programme and Special Long-Term Repo Operations, on tap targeted Long-Term Repo Operations, etc. to provide further liquidity. Thereafter, RBI used Variable Rate Reverse Repo, reverse repo auctions to rebalance liquidity conditions.
Exceptional Year for the Capital Markets
Rs. 89,066 crore was raised via 75 Initial Public Offering (IPO) issues in April-November 2021, which is much higher than in any year in the last decade.
Banking Sector
The credit growth had been declining since 2019. However, the credit growth which was 5.3 per cent at beginning of April 2021 stood at 9.2 per cent as on 31st December 2021.
In 2021-22, the risk capital (i.e. money raised from capital markets) has so far been more important than the banks in providing finance to the revival
The Gross Non-Performing Advances ratio of Scheduled Commercial Banks (SCBs) declined from 11.2 per cent at the end of 2017-18 to 6.9 per cent at the end of September, 2021.
Net Non-Performing Advances ratio declined from 6 per cent to 2.2 per cent during the same period.
Capital to risk-weighted asset ratio of SCBs continued to increase from 13 per cent in 2013-14 to 16.54 per cent at the end of September 2021.
Non-Banking Financial Companies (NBFCs) Sector
Credit growth of NBFCs continued to remain sluggish in 2021-22 so far.
Industry remained the largest recipient of credit extended by the NBFC sector, followed by retail loans and services
Investment By Foreign Portfolio Investors (FPIs)
During April-November 2021, FPIs made a net investment of Rs. 24,124 crore in Indian securities, which was 82.8 per cent lower than that made in same period previous year.
Insurance Sector
In India, insurance penetration was 2.71 per cent in 2001 and has steadily increased to 4.2 per cent in 2020.
As of 2020, the penetration for life insurance in India is 3.2 per cent and non- life insurance penetration is 1 per cent.
Globally, insurance penetration was 3.3 per cent for the life segment and 4.1 per cent for the non-life segment in 2020.
The insurance density in India increased from $11.5 in 2001 to $78 in 2020.
In 2020, density for Life insurance in India is $59 and Non-Life insurance is $19, much lower than global standards.
Pension Sector
The total number of subscribers under New Pension Scheme (NPS) and Atal Pension Yojana (APY) increased from 374.32 lakh as on September 2020 to 463 lakh as on September 2021, recording a growth of 23.7 per cent over the year.
Insolvency and Bankruptcy Code
At present, Insolvency and Bankruptcy Code, 2016 (IBC) provides for the domestic laws for the handling of an insolvent enterprise. IBC at present has no standard instrument to restructure the firms involving cross border jurisdictions.
The absence of standardized cross border insolvency framework creates complexities and raises various issues such as:
The extent to which an insolvency administrator may obtain access to assets held in a foreign country.
Priority of payments- Whether local creditors may have access to local assets before funds go to the foreign administration or not.
Recognition of the claims of local creditors in a foreign administration.
Recognition and enforcement of local securities, taxation system over local assets where a foreign administrator is appointed etc.
Cross border insolvency is regulated by Section 234 and 235 of IBC.
Section 234 empowers the Central Government to enter into bilateral agreements with other countries to resolve situations about cross-border insolvency.
The Adjudicating Authority can issue a letter of request to a court or an authority (under Section 235) competent to deal with a request for evidence or action in connection with insolvency proceedings under the Code in countries with the agreement (under Section 234).
