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WORKING PAPERS

NIBM working paper series is an initiative to disseminate the initial research outcome of NIBM faculty members. The major research areas are Finance, International Finance, Credit Risk, Market Risk, Operational Risk, Treasury, Agricultural Finance, Economics, Marketing, Strategy, Operations Management, Analytics, Information Systems, and Human Resource Management within the broad areas of banking and finance. These research works are not peer-reviewed. The idea is to share the research outcomes to receive comments and suggestions. Some of the papers are expected to be under review for possible publications in peer-reviewed journals. Any citation of these research papers requires to mention of the appropriate URL with the source, and the date of access.


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Paper Number:  WP29/2023
Publication Year:  June 2023

Financial Instability, Credit Growth and Optimal Monetary Policy Design

Authors:   Sanjay Basu, sbasu@nibmindia.org
Tasneem Chherawala

An increase in policy rates, in order to control inflation, may lead to a credit crunch, slowdown in economic growth and spurt in non-performing loans. In this paper, we explore the impact of policy rate shocks on the volume and cost of bank credit, in an imperfect competition framework. …

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Paper Number:  WP28/2023
Publication Year:  June 2023

Green Deposits Acceptance Framework: Fostering a Green Finance Eco-system

Authors:   Sarita Bhatnagar, sarita@nibmindia.org
V S Kaveri

Access to finance is crucial to catalysing the measures needed to achieve net zero targets and a systematic transition to a low-carbon economy. Reserve Bank of India’s Framework for Acceptance of Green Deposits has provided a fillip to the development of a green finance ecosystem in India. Banks can …

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Paper Number:  WP27/2023
Publication Year:  June 2023

Unlocking Potential: Reinforcing the SHG-BLP through Collaborative Efforts and Innovative Lending Mechanisms

Authors:   Naveen Kumar K, naveen@nibmindia.org

The revised RBI notification on the Self-Help Group Bank Linkage Program (SHG-BLP) provides a roadmap for strengthening and enhancing the program's effectiveness in the banking and financial sector. The key measures to be taken include strengthening collaboration with government agencies and NGOs, innovating lending mechanisms to cater to diverse …

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Paper Number:  WP26/2023
Publication Year:  June 2023

Estimation of Implied Probability of Default from Corporate Bond Spreads: An Empirical Study of Indian Market

Authors:   Tasneem Chherawala, tasneem@nibmindia.org
Arindam Bandyopadhyay

This paper describes probability of default (PD) analysis for Corporate Bonds, Debentures, Preference Shares of the Nature of Debt and Refinance Exposures to Banks. We have empirically shown that the historical data on credit spreads published by FBIL are the appropriate basis for extracting the market-implied default probabilities associated …

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Paper Number:  WP25/2023
Publication Year:  May 2023

End of the LIBOR Era and the Road Ahead for Financial Markets

Authors:   Tasneem Chherawala, tasneem@nibmindia.org

This article provides an overview of the impending cessation of the London Interbank Offer Rate (LIBOR) and its implications for Indian markets. As a key reference interest rate, the LIBOR dominated global financial markets for over three decades but its credibility came under scrutiny post the financial crisis of …

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Paper Number:  WP24/2023
Publication Year:  May 2023

Operational Efficiency in the Presence of Undesirable Byproducts: An Analysis of Indian Banking Sector under Traditional and Market-Based Banking Framework

Authors:   Gargi Sanati, gargi@nibmindia.org
Anup Kumar Bharndari

In the backdrop of an increase in market-based banking activities, we study the operational efficiency of the Indian banking sector during 2009-10 through 2017-18 considering Market Return as desirable outputs, in addition to Advances and Slippage as undesirable byproducts simultaneously. Using data envelopment analysis (DEA) method, we estimate six …

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Paper Number:  WP23/2022
Publication Year:  November 2022

Improving Asset Quality Data through Divergence Disclosures

Authors:   Dipali Krishnakumar, k.dipali@nibmindia.org

The Reserve Bank of India has tightened the norms for disclosure of divergence on asset classification and provisioning by commercial banks and also made disclosure norms applicable to Primary (Urban) Co-operative Banks (UCBs). This article describes the concept of divergence, discusses typical reasons for divergence, provides an analysis on …

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Paper Number:  WP22/2022
Publication Year:  July 2022

Internationalization of Rupee: Discerning the Market Sentiment

Authors:   Gargi Sanati, gargi@nibmindia.org

To promote global trade in an inexact settlement mechanism experienced by Russia, RBI has allowed the invoicing and settlement of exports/imports in rupee. In the backdrop of the US sanction on the Central Bank of Russia, the move towards INR settlement is not only a timely move to protect …

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Paper Number:  WP21/2022
Publication Year:  July 2022

Impact of Changes in RBI Policies on Trading and Investments of Commercial Banks in India

Authors:   Kedar nath Mukherjee, keder@nibmindia.org

Investments in various segments of/instruments available in the financial market made by the commercial banks play a very crucial role not only in achieving the return target of banks and managing their liquidity but also in the overall growth and development of the financial market in bank driven and …

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Paper Number:  WP20/2022
Publication Year:  June 2022

Lending by Banks to NBFCs for On-lending to Priority Sectors: Recent RBI Guidelines and Way Forward

Authors:   M Manickaraj, manick@nibmindia.org
Elizabeth James

The Reserve Bank of India (RBI) has allowed scheduled commercial banks (SCBs) and small finance banks (SFBs)to lend money to Non-Banking Finance Companies (NBFCs) and NBFFC – Micro Finance Institutions (NBFC-MFIs) respectively for the purpose of on-lending to the priority sectors. As per the Master Directions on Priority Sector …

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