ICICI Securities: Current Account Discipline - Not An Easy Nut To Crack For Banks
A customer writes on a cheque deposit slip at a bank branch in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

ICICI Securities: Current Account Discipline - Not An Easy Nut To Crack For Banks

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ICICI Securities Report

Even after a week of the Reserve Bank of India’s notification on current account (CA) discipline, our interactions with bankers suggest that quantifying the (positive/adverse) effect is a humungous task at this juncture as it calls for assessment on a case-to-case basis across business segments.

However, broader implications are clear:

1. the objective is to monitor the cash flows and end-use of funds to avoid diversion / frauds;

2.both CA (Rs 12 trillion) and cash credit/over draft (Rs 20 trillion) balance in absolute term may shrink (at least to the extent of an overlap - estimated at single digit proportion of CA);

3. ability to earn out of CAs will taper off;

4. realignment of CA ownership with lending facility is not so straight forward; some consolidation, some shakeout in relationship as disproportionate CA or overboard credit facility may not co-exist.

Click on the attachment to read the full report:

ICICI Securities Banking_Current account discipline Aug20.pdf


This report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint.

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