Banks are classified into public sector banks, private sector banks, corporate

sector and development banks. The Pradhan Mantri Jan Dhan Yojana (PMJDY) has been a
step forward in bringing the vast rural unbanked population into receiving banking services. In
November of 2014, the Reserve Bank of India issued initiated the idea of small and
payments banks to further the cause of financial inclusion. As of 3 February, 2015
the RBI has received upto 113 applications for setting up small and payments banks.
The RBI cut repo rate by 25 basis points in January, signalling the start of a rate-cut
cycle with easing inflation rates. The central bank now expects lenders to pass the
benefits of the rate cut by lowering lending rates.
The recent RBI review policy in the first week of February kept the repo rate
unchanged but slashed SLR by 50 bps freeing about Rs 45000 Cr funds in the
banking system.
The ECB announced plans to buy 60bn of assets each month till September 2016 in
a bid to revive the ailing European economy. The Indian stock market benefitted from
the news with increasing FII inflows on account of high interest rates/growth
opportunities.
The Swiss National Banks decision to remove the cap on the Swiss Francs value
resulted in its subsequent appreciation, thereby triggering negative sentiments for
companies like Bharti Airtel and BPCL which have debt exposure in Swiss Franc
currency.
Poor Q3 performance results posted by Bank of Baroda raised concerns over asset
quality with increase in NPAs triggering a reversal in buying streak of bank stocks.
HDFC Bank has raised around Rs 10,500 crore through simultaneous share sales to
institutional investors on Indian and US exchanges.
With the Government raising the FDI cap in the insurance sector from 26% to 49%
via the ordinance route, the IRDA reported increased interest from mew players in
the sector.
Future Outlook/Expectations from Government Budget:

The insurance sector expects the hike in FDI in the insurance sector to be
passed by the parliament.
Expectations of service tax exemptions on term and health insurance would
aid in improving insurance density.
The RBI has indicated that it will wait for the Budget to see if the Government
is able to meet its fiscal deficit targets for future rate cuts.

Current Progress:
Visited finance lab in campus and got acquainted with the Reuters Terminal. We have
created a preliminary portfolio based on stocks of personal interest such as HDFC,
YES Bank and SBI. We intend to study the financial reports of the above banks and
update the portfolio as we progress. Over the coming weeks, we also aim to learn
more about the mutual fund and insurance sectors, apart from focussing on NBFCs
as well.