RBI Released Data on the Performance of the Private Corporate Sector in Q3 FY23

On March 02, 2023, the Reserve Bank of India (RBI) released data on the performance of the private corporate sector during the third quarter of 2022-23 (i.e., Q3 FY23)

Highlights of the Q3 FY23 data:

i.Sales

• The year-on-year  (y-o-y) sales growth of listed private non-financial companies moderated to 12.7% in Q3 FY23 from 22.6 % in Q2 FY23.
• In case of manufacturing companies the sales growth (y-o-y) was reduced to 10.6  in Q3 FY23 from 20.9 % in Q2 FY23 (the moderation was broad-based across the industries, except for cement).
• Growth of Information technology (IT) companies recorded 19.4% (y-o-y) rise in sales growth during Q3 FY23.
• Performance in trade, transport and telecommunication sectors supported for steady revenue growth of non-IT services companies.

ii.Expenditure

• Due to lower sales growth Manufacturing companies’ expenses on raw materials was moderated.
• Staff cost  for manufacturing, IT and non-IT services companies, increased on y-o-y basis by 8.8%, 21.8% and 18.2% respectively.
• The ratio of staff cost to sales stood at 5.3%, 49.6 % and 8.1% for manufacturing, IT and non-IT services companies, respectively.

iii.Profit: Q3 FY23 Operating profit of both IT and non-IT services companies were increased whereas for the manufacturing companies it was contracted on an annual (y-o-y) basis.

iv.Interest: Due to lower profits, the interest coverage ratio (ICR) of manufacturing companies was reduced to 6.3 in Q3 FY23 (Compared to 8.6 in Q3 FY22 ). The ICR was at 48.9 for IT companies (61.3 in Q3 FY22)

v.Pricing power: Operating profit margin increased a little bit for manufacturing companies, it remained steady for IT companies and in case of non-IT services companies it was continued to record net losses, mainly due to the losses recorded by telecom companies.

In exercise of powers under sub section (1) of Section 35 A of the Banking Regulation Act, 1949, read with Section 56 of the Banking Regulation Act, 1949, the Reserve Bank of India (RBI)

-RBI imposed Restriction on Musiri Urban Co-operative Bank; caps withdrawals at Rs 5,000 per customer

On March 02, 2023, considering the deteriorating financial condition of Musiri Urban Co-operative Bank Ltd., Musiri, Tamil Nadu, the Reserve Bank of India (RBI) has imposed a Rs 5,000 cap on withdrawals by individual customers.

• The directions were issued by RBI in exercise of powers vested under sub section (1) of Section 35 A of the Banking Regulation Act, 1949, read with Section 56 of the Banking Regulation Act, 1949.
• The restrictions on the cooperative bank will remain in force for 6 months from the close of business on March 3, 2023.

Key Points:

i.The cooperative bank, cannot grant loans, make any investment, and disburse any payment without approval of the RBI. It cannot also dispose of any of its properties.

ii.Under the provisions of Section 18A of the DICGC (Deposit Insurance and Credit Guarantee Corporation) Act (amendment) 2021, RBI allows eligible depositors to receive deposit insurance claim amount of his/her deposits up to a Rs 5 lakh from the DICGC.

iii.The Co-operative bank allowed to undertake banking business with restrictions till its financial position improves

Recent Related News:

The Reserve Bank of India (RBI) has partially relaxed the restrictions it had imposed on SBM Bank (India) Limited (“SBM Bank India“) with regard to transactions made under the Liberalised Remittances Scheme (LRS).

About the Reserve Bank of India (RBI):

Governor – Shaktikanta Das
Deputy Governors – Mahesh Kumar Jain, Michael Debabrata Patra, M. Rajeshwar Rao, T. Rabi Sankar
Headquarters – Mumbai, Maharashtra
Establishment – 1st April 1935