Factors and Policy affecting Bankers

A good and informative article shared from my friend Shri Arvind Mannur's post:

MAJOR POLICIES THAT AFFECT BANKS:

All the major policy matters decide the destiny of banks. Look at the following:

1. MONETARY POLICY decides the volume of business growth, interest rates on deposits & lending, and all other prudential regulations.

2. FISCAL POLICY decides the tax matters that affect banking. Many banks have shown higher profits by articulating good tax planning.

3. The GOVERNMENT DEBT POLICY decides the Investment Portfolio of banks wherein banks lend to Government under SLR portfolio and invest in dated and debt instruments.

4. The GOVERNMENT BORROWING POLICY helps to take active part in RBI auctions for dated securities. Many banks in the past used to make sizeable profits in Treasury operations and dealings in secondary market.

5. IMPORT-EXPORT POLICY will give broad view of corporate performance in export-led industries. Foreign exchange business is closely inter-linked with this policy.

6. New GST TAX POLICY will give adequate scope in financing trade, transport, infrastructure, consumer lending and even opening new branches. A vast opportunity has opened up for banks.

7. CAPITAL MARKET will have impact on CP, CD and equity trading in banks. Banks also invest in mutual funds which come under this activity. Banks are the conduits for IPOs and other payment transactions.

8. INFORMATION TECHNOLOGY POLICY paves way for banks to align itself with payment & settlement system,and digital money movement.

Hence, a good banker should be an all-rounder. When banks are operating in the competitive era, a holistic approach to banking is very essential.

We have to come out of the mindset that RBI policy alone matters. Whole economy impacts banking.
Any comments welcome.